SOYBEAN HEDGERS: EXIT HEDGE IN NOV. SOYBEANS... Soybean futures have pulled back sharply from the highs earlier this month but now appear ready to strengthen again. Soybean hedgers were advised this morning to exit the 50% hedge in Nov. soybean futures. Our exit was at $12.75 3/4 for a 56 3/4-cent loss. Be prepared to make cash sales on a return to the early June highs.
TRIP REPORT FROM EASTERN CORN BELT... Pro Farmer crop consultant Dr. Michael Cordonnier recently traveled through western Ohio, Indiana and eastern Illinois. He reports the corn crop was generally not as good as he anticipated, noting a lot of variability in the crop. He labels soybeans in areas he toured as "disappointing." Following are his observations by state:
Western Ohio: Soils have dried out to the point where rains are needed and some moisture stress is apparent on late-planted corn. Overall, he rated the Ohio corn crop as having average to slightly above-average yield potential. Soybeans were disappointing and are generally "below-par" and would need favorable weather in July and August to achieve trendline yields.
Indiana: Moisture goes from dry in eastern areas of the state to adequate in the west. Corn has below-average yield potential in eastern Indiana, while the crop in the western portion of the state has average to above-average yield potential. He says soybeans are generally disappointing given their delayed development.
Eastern Illinois: Soil moisture is adequate to excessive after last weekend's rains. Corn ranges from very good to poor with variability noted. He calls the soybean crop "a work in progress." Some of the crop has average yield potential and some has just emerged.
CONSULTANT LOWERS SOYBEAN YIELD FORECAST, CORN UNCHANGED... Dr. Cordonnier trimmed his soybean yield forecast by 0.5 bu. per acre to 42 bu. per acre due to the lateness of the crop. He now sees production at 3.22 billion bu., with a crop range from 3.07 billion bu. (40 bu. per acre) to 3.38 billion bu. (44 bu. per acre). Dr. Cordonnier maintains a neutral to lower bias for his soybean yield estimate. Of the top 18 production bean states, he currently puts 23.1% of acres in the below-trendline category, 44.8% in the trendline category and 26.3% in the below-trendline category -- all unchanged from last week.
For corn, Dr. Cordonnier left his yield and production forecasts at 153 bu. per acre and 13.26 billion bushels. He continues to see a crop ranging from 12.65 billion bu. (146 bu. per acre) to 13.87 billion bu. (160 bu. per acre) and maintains a neutral position toward his crop estimate. Of the top 18 production states, he puts 32.7% in the below-trendline category (45.2% last week), 39.6% in the trendline category (28% last week) and 17.7% in the above-trendline category (16.8% last week).
STATS CANADA UPDATES CANADIAN PLANTED ACREAGE... Statistics Canada released results of its second survey of Canadian plantings this morning. As expected, wheat acreage declined from earlier intentions, while canola acreage increased. Stats Canada estimates Canadian all wheat acreage at 25.9 million, down roughly 700,000 acres from its earlier forecast, but still 2.2 million acres more than year-ago. Canola acreage came in at 19.7 million acres, which was roughly 600,000 acres more than earlier intentions, but 1.8 million acres fewer than in 2012. Barley acreage was put at 7.2 million acres, virtually the same as April intentions, but down around 200,000 acres from last year.
Pro Farmer Canada editor Mike Jubinville says, "Interestingly, Stats Canada left summer fallow area unchanged, which implies that farmers expressed intent to plant all area at survey time. Fallow still needs to be revised higher, which means wheat area is still likely 500,000 acres too high." He adds, "Market significance of these numbers will probably quickly fade as immediate weather forecasts and expectation of it into July are viewed as much more important ingredients to determining ultimate crop supply total."
FOOD PRICE DIRECTION REMAINS MIXED FOR 2013... USDA's Economic Research Service (ERS) forecasts all food and food-at-home prices in 2013 will increase 2.5% to 3.5% based on current conditions. This forecast implies that prices will likely increase more so than in 2012, but that inflation will remain near the historical average for both indexes. ERS notes that it expects inflation to remain strong, especially in the first half of 2013 for most animal-based food products due to higher feed prices. "For most food categories not directly affected by the 2012 drought, however, inflation is expected to be at or even below normal levels," ERS continues.
The Consumer Price Index (CPI) for all food declined 0.1% from April to May to 1.4% above year-ago levels. The food-at-home CPI rose 0.3% since April to 0.8% above May 2012. The food-away-from-home (restaurant) index rose 0.2% from April to 2.3% above year-ago. The all-items CPI rose 0.2% for the month of May to 1.4% above year-ago. "The overall direction of prices in 2013 continues to be mixed, and the food-at-home CPI is down 0.1% thus far in 2013," ERS explains. Get more details.