Morning Comments - Could there be surprises in acreage?
Jun 27, 2014
Wheat was able to hang on for higher close for a second day yesterday but we have surrendered part of that now in the overnight hours. Realistically there is very little news to cover this morning as most of the action and focus well be on squaring up positions in front of the reports on Monday. There is of course always the potential for an element of surprise when the government revises numbers but regardless, almost any report will be quickly factored into prices and the focus will shift to other news at hand and right now, most of that will lean to the negative side. This is not to say that a short covering rally will not be in order but odds of an extended advance appear slim for now.
The average estimates according to the WSJ have June 1st wheat stocks at 603 million with a range of 561 to 715. Planted acreage for all wheat is expected to be 55.707 million acres with a range of 54.8 to 56 million. The Hueber Report is looking for stocks of 715 million and an acreage number of 55.2 million.
The corn market continues to wallow around in a congestion range as we await the reports this coming Monday. We know there remains an area in the Iowa/Nebraska/Minnesota region that would think otherwise but the overall weather has been close to ideal for corn development and the outlook looks quite good right through the first week of July. Realistically this will carry us into the beginning of pollination for a large swath of the Midwest and with more than ample soil moisture, it would require something quite extreme to rob us of great yields. Once we have digested whatever information comes from the report, attention will turn completely to weather. It is interesting to note that there was quite a bit of discussion yesterday about corn acreage after both Monsanto and Bayer reported lower seed corn sales as well as higher bean sales. Could this be the stimulus to start a short covering bounce?
The average estimate according to the WSJ for Monday are; June 1st corn stocks at 3.724 billion bushels with a range of 3.046 to 4.05. The average acre estimate stands at 91.787 million with a range of 91 to 92.3. The official Hueber Report estimates are 3.775 billion of the stocks number and 92.2 for acreage.
We cannot overlook the Hog and Pigs report that will be issued later today. The average trade estimate has All Hogs and Pigs at 97.1%, Kept for Breeding at 101.8% and Kept for Marketing at 96.8%.
Beans pushed up to the highest close posted since the 11th of June prompted by the positive export sales report. While technically this is a positive move and could have opened the door for a little more strength, prices have pulled back a bit this morning as traders even the books in front of Monday.
It seems that we have been talking about this report forever and as such, unless there is some kind of shocker, it could turn out to be anticlimactic. Note the comments under corn about the reports from Monsanto and Bayer about bean seed sales. If this relates to another 1 to 2 million acres on top of the already record projected acreage number you would have to question how much longer the November futures can hold above this 12.00 mark without a weather issue.
Looking out to Monday, according to the WSJ the report estimates are as follows; June 1st stocks 387 million bushels with a range of 334 to 450 million. The Hueber Report estimate is 410 million. For acreage the average estimate is 82.173 million with a range of 80.5 to 83.2 million. Our estimate is 82.95 million.