CONSULTANT RAISES CORN CROP PEG TO REFLECT ACREAGE INCREASE... Crop consultant Dr. Michael Cordonnier has raised his corn production estimate to reflect higher planted corn acres. Last week USDA raised its corn planted acreage estimate to 97.4 million acres. While he feels that's too high, Dr. Cordonnier raised his corn planted acreage figure to 96.4 million and his harvested acreage peg to 88.2 million. Dr. Cordonnier left his yield estimate unchanged at 153 bu. per acre, resulting in a corn crop forecast of 13.49 billion bu. versus 13.26 billion bu. previously. But he's now neutral to positive toward corn yields.
USDA's planted soybean acreage estimate was in line with Dr. Cordonnier's at 77.7 million acres and he left his yield projection at 42 bu. per acre this week. As a result, Dr. Cordonnier's soybean crop estimate remains at 3.22 billion bu., but he remains neutral to slightly negative toward the soybean crop.
"I am actually more concerned about soybean development than corn development," adds Dr. Cordonnier. "If a corn plant is immature when the first killing frost hits, the plant still produces a kernel, it just might be lighter than normal and poorer quality than normal. If a killing frost hits a soybean plant before it's mature... a soybean plant either produces a seed or not -- there is very little in between."
VEGETATIVE CONDITIONS POOR ACROSS IOWA AND MINNESOTA... The Kansas Applied Remote Sensing (KARS) GreenReport "greenness" map, that compares vegetative difference to the average for this time of year, reflects decreased greenness across Iowa, Minnesota and central Illinois. More favorable conditions are seen in northern Illinois, western Nebraska and portions of the far eastern Corn Belt. The maps tell a story of contrast so far this year. Click here.
CAN'T RULE OUT LA NINA... That assessment comes from the Australian Bureau of Meteorology. It says while neutral ENSO conditions continue and most weather models suggest that will remain the case for the remainder of the year, the development of La Nina this year can't be ruled out. The bureau states surface waters of the eastern Pacific have cooled recently, but sea surface readings remain in neutral territory for now.
"There is some divergence in the outlooks from the seven international models surveyed by the Bureau of Meteorology," it states. "Both the Bureau of Meteorology and UK models suggest there is an increased chance of weak La Nina conditions forming during the winter months. However, the remainder of the models indicate neutral ENSO conditions are likely to continue."
PF MIDWEEK MARKETING GAME PLAN UPDATE...
CORN: Hedgers and cash-only marketers are 100% sold in the cash market for 2012-crop. For 2013-crop, hedgers and cash-only marketers have 25% of expected 2013-crop production sold via cash forward contract for harvest delivery. With traders' attitudes turning bearish toward corn, we are looking to reduce downside risk on corrective price rallies, especially for hedgers, and then we'll look to reown a portion of sales if the market eventually wakes up to crop problems in Iowa and Minnesota.
BEANS: Hedgers and cash-only marketers are 100% sold in the cash market for 2012-crop. For 2013-crop, hedgers and cash-only marketers have 20% of expected 2013-crop production sold via cash forward contract for harvest delivery. With crop conditions improving and traders' attitudes turning price-negative, be prepared to increase new-crop sales on a corrective price recovery, especially if you are a hedger.
WHEAT: Given the violation of support at the spring lows, be prepared to make new-crop sales to trim downside risk. We'll be more aggressive with sales for hedgers as you can always reown a portion of sales on the board if attitudes strengthen.
COTTON: Hedgers are 100% sold on 2012-crop in the cash market, with cash-only marketers 85% sold on old-crop. Cash-only marketers should be prepared to finish old-crop sales as the 2012-13 marketing year is winding down. For 2013-crop, hedgers and cash-only marketers have 50% of expected production sold via cash forward contract for harvest delivery. Hedgers also have 50% of expected production hedged in December cotton at 83.87 cents. We are willing to hold onto that coverage as that's still an attractive price.
CATTLE: The cattle market is signaling a low is in place, though a price recovery may be slow and gradual unless the boxed beef and cash cattle markets catch fire. Fed cattle producers should continue to carry all risk in the cash market. If feeder cattle show continued strength, we'll add long hedges for feeder cattle buyers.
HOGS: Hog producers have 50% of expected 3rd-qtr. production is hedged in Aug. lean hog futures at an average price of $97.67 1/2 and 25% of expected 4th-qtr. production is hedged in Dec. lean hog futures at an average price of $82.12 1/2. Be prepared to heavy up that coverage on signs a major top is in place.
FEED: Continue to carry all feed risk in the cash market for now. Soymeal prices still aren't attractive to lock in for an extended period and the price trend is corn is down.