Morning Comments - Time to look out to the Friday Figues
May 06, 2014
Up Monday, down Tuesday. That is what it would appear we have at least so far in the Chicago wheat market but the pressure is not terribly significant and the KC market is a touch in the plus column. Values did back off from highs significantly yesterday but we still closed above key resistance and appear positioned to work into higher ground.
The situation in Ukraine has not improved any but neither has there been any verifiable issue with shipping or the spring crops that have not already been factored into the risk premium. That turns the story back to the domestic front.
As expected wheat conditions slipped once again with good/excellent down 2% to 31%, fair down 2% to 31% which means the poor/very poor number needed to push up 4% and stands at 38%. Comparatively, last year at this time the numbers stood at 32/29/39. Spring wheat planting increased 8% to 26%. This compares with 21% last year and an average of 41%.
Export inspections were about as expected at 19.8 million bushels bringing the marketing YTD tally up to 1.064 billion. It is looking a bit questionable as to if we can make the projections as with just 4 weeks to go, we need to export 110.5 million bushels or 27.6 million per week. Over the past 10 weeks we have averaged 20.7 million per week.
Focus through the balance of the week should shift to the reports on Friday. Currently the average trade estimate is looking for winter wheat production of 1.468 billion, 13/14 ending stocks of 588 million and 14/15 ending stocks little changed from there at 553 million. For world ending stocks the average estimate for 13/14 is 185.95 MMT and for 14/15 is 184.53 MMT.
While I am not looking for a runaway in the wheat market as production potential through the rest of the world continues to look promising but currently it is the market that would appear to have upside room.
Solid rally in the corn market yesterday as we pressed back against key overhead resistance but we have unwound part of those gains overnight. The semi-favorable weather outlook and prospects for rapid planting progress should keep a lid on this market.
As of May 5th, planting did reach 29% for the nation, which was up 10% for the week and within the range of estimates. It is always interesting to note how various people report figures like this as it become pretty obvious of what their market bias is without them flatly stating it. Those bullish reported that corn planting was ONLY 29% compared with a historical average for this date of 42%. The bears in turn would say, another 10% of corn made it into the ground during the past week which keeps us a full 17% above the pace last year and with the great weather outlook, we could see massive gains this week. Take your pick. Regardless, we should not have much problem pushing north of the 50% level before next Monday.
Export inspections came in right at the 10-week average at 48.8 million bushels. Marketing YTD we now stand at 1.151 billion bushels. I fully expect the USDA to boost the estimate 50 million bushels on Friday but with the current target of 1.75 billion we will need to average 35.2 million per week for the next 17 weeks. This will need to be watched closely as so far, exports shipments have not been keeping pace with sales and while the USDA may project 1.75 to 1.8 billion bushels, we may never get that out of the country before the end of the year.
For Friday, the average trade estimate for 13/14 ending stock is down just 17 million bushels at 1.314 billion. If exports are bumped higher part of that may be compensated for via the huge feed/residual number. For 14/15 we should see no changes in the acreage from the March intentions so the big question will be what they plug in for a trend-line yield. It should be in the 163/165 range. The average estimate so far for the 14/15 ending stocks is 1.672 billion. World ending stocks for 13/14 are estimated to be 157.3 MMT and for 14/15 159.41.
While there is no question that we have the entire growing season ahead of us and with the increased usage, we have less room for crop problems but it would appear that is one of the few remaining strands that the bulls can hang onto at this point.
The early strength in the bean market faded pretty quickly and now in the overnight trade, we have pressed down through key levels of support. If this weakness carries into the close, it would paint a negative picture.
The trade attention has slowly but surely turned to the record imports that are moving into the United States. Through February we had imported 20 million bushels and there are already another 15 million that should be into our shores over the next several weeks. Last year total we imported 36 million. We should see updates through March over the next few days but beans continue to come from all directions. Through February Canada has sent us 11.5 million bushels which is nearly double that of a year ago.
On the flip side, export inspections were within trade estimates but the third lowest of the marketing year at 3.7 million bushels. Marketing year to date we stand at 1.523 billion bushels, just 57 million below the target. This means that we will need to average 3.3 million per week to reach the 1.580 billion target which is not far off of this past weeks number.
We did see a little planting progress made as we increased 3% to a total of 5% in the ground. This compares with last year at 2% and an average of 11%.
Looking out to the Friday supply/demand estimates, the average estimate for the 13/14 carryout is 134 million, which is virtually unchanged and 307 million bushels for the 14/15 ending stocks. World ending stocks for 13/14 are expected to fall in around 69.77 MMT and for 14/15 80.34.
Without a weather issue, it would appear that the bean bull has little to look forward to.