july wasde
July 10, 2015
JULY WASDE The July WASDE report was released Friday morning, incorporating stocks and acreage data from the June 30th reports. Below is a summary of the numbers. 14/15 WASDE
July Carryout (mbu)
Avg Estimate (mbu)
June Carryout (mbu)
July ARG Prod (mmt)
June ARG Prod (mmt)
July BZL Prod (mmt)
June BZL Prod(mmt)
14/15 World Carryout
June World Carryout
Corn
1,779
1,811
1,876
25.0
25.0
82.0
81.0
193.9
197.0
Soybeans
255
287
330
60.0
59.5
94.5
94.5
81.7
83.7
15/16 WASDE
July Carryout (mbu)
Avg Estimate (mbu)
Yield (bu/acre)
Planted Acres (million)
Production (mbu)
15/16 Usage (mbu)
July World Carryout (mmt)
Avg Estimate (mmt)
June World Carryout
Corn
1,599
1,540
*166.8
**88.9
13,530
13,735
189.9
193.0
195.2
Soybeans
425 842
370 861
*46.0 44.3
**85.1 56.1
3,885 2,148
3,744 2,189
91.8 219.8
91.9 200.4
93.2 202.4
Wheat
*Yield was left unchanged, but will be updated in the August S&D report **Acres were pulled from the June 30th Planted Acreage report
CORN The friendly June 30th Stocks report allowed the USDA to raise old crop feed demand 50 mbu this month. Combined with increases in ethanol (+25 mbu) and exports (+25 mbu), improved demand shrunk the 14/15 carryout by 97 mbu. The new crop balance sheet saw the USDA leave yield estimates unchanged, noting that updates would be available in their August 12th report. Acreage numbers were pulled from the June 30th acreage report, so the reduction in harvested acres allowed production estimates to decline 100 mbu for new crop corn. New crop demand projections saw feed (-25 mbu) and exports (-25 mbu) reduced, while ethanol added 25 mbu. The net effect was a reduction to the new crop carryout of 172 mbu – the market was looking for a little bit more. Our Take: The market is trading its own yield ideas right now, so the USDA leaving their number unchanged had little impact to the trade. It will be difficult to get an accurate feel on the national yield until we see the USDA’s thoughts on August 12th. Until then, crop ratings and the weather forecast through pollination will dictate whether we go higher or lower. Either way you cut it, corn feels supported based on the unknowns. SOYBEANS The old crop soybean balance sheet saw demand continue to work higher with crush and exports each adding 15 mbu on Friday. The June 30th stocks report confirmed a tighter soybean situation that some had suspected, which resulted in a 44 mbu increase to residual demand. This essentially means that the USDA overestimated the size of last year’s crop and they are accounting for it here. The result was a 75 mbu reduction to the old crop carryout. New crop saw acreage ideas come straight across from the acreage report in June, while yield was left untouched and will await August revisions. The higher acres from June bumped production higher (+35 mbu), but a smaller carry-in and an increase to crush demand (+10 mbu) led to a net reduction in the carryout by 50 mbu. However, at 425 mbu, the estimate was higher than pre-report thoughts. Our Take: The soybean market has acreage and yield questions right now, even after the updated acreage numbers in June. Until the USDA updates their thoughts on both of these categories, the market should have a hard time selling off. There seem to be too many question marks with soybeans right now to push them aggressively lower.
CORN FAN THE FLAMES The bullish pop of 2015 continued this past week, as September corn gathered enough buying interest to keep it well supported through report day. The July S&D confirmed the recent idea that old crop stocks are NOT growing, allowing September corn to close positively on Friday, adding 5’6 cents for the week at $4.34’2. Following the report numbers, September corn bested its highs from December, trading to its highest level in over a year. Basis values continue to temper the cash market, however, as local outlets are getting hit by heavy farmer sales of old crop corn. CROP PROGRESS / CONDITION Corn condition ratings were updated on Monday afternoon with expectations going in that good/excellent ratings would be flat. A one point improvement to the ratings was observed, with 69% of the US corn crop rated good/excellent. The market reacted negatively to the improvement for half of Tuesday’s session before shrugging off the data and resuming the bullish trade. Good vs poor conditions are clearly segregated by geography with the Western and Northern Corn Belt carrying the US crop. To that point, Poor/Very Poor crop ratings are interesting to look at for the ECB states: OH (15%), IN (21%), IL (12%), & MO (16%). Key states and their current deviation from average in terms of g/e rating: NE (-1), KS (+5), SD (+1), MN (+11), IA (+15), IL (+1), IN (-10), OH (-16), & MO (-3). Corn Silking stood at 12% on Monday afternoon vs 15% a year ago and 18% on average. Editor’s Note: The market is trying to wrap its arms around production ideas and right now, the problems in the ECB are outweighing the good looking crop in the West. A yield below trendline is being priced in right now and inquiring minds want to know, how low of a yield will the market perceive? This will present us with an opportunity to price additional bushels before the reality of that yield hits the market. At this point, the uncertainty is providing a great opportunity to market some grain.
September Corn Futures
Corn Condition Nebraska Kansas Illinois Iowa S Dakota Minnesota Indiana US Total
This Week
Change vs LW
Last Year
72% 55% 61% 82% 74% 84% 48% 69%
+2 -1 -1 -1 +2 +3 +1
72% 58% 80% 76% 80% 64% 75% 75%
FC Stone
FC Stone
EXPORTS Weekly export sales were within the range of expectations, coming in at 21.1 mbu. Cumulative sales stand at 1,819 mbu vs 1,873 a year ago (-2.9%). The USDA’s recent revision higher in export demand (+15 mbu) means that weekly sales will need to average 5.13 mbu each week over the remaining 8 weeks. Corn export inspections totaled 33.0 mbu this past week, towards the bottom end of trade estimates. The recent shipment pace has been respectable, with cumulative inspections standing at 1,447 mbu vs 1,540 mbu a year ago (-6.0%). In order to hit the USDA’s revised estimate, weekly shipments will need to average 34 mbu over the remaining 8 weeks. ETHANOL Ethanol production for the week ending July 3rd was pegged at 987k barrels per day, up from 968k barrels/day the previous week. That production rate was good enough to chew through 103 mbu of corn, the 8th straight week of 100+mbu. Stocks rose slightly (+13 mln gal) but overall have declined steadily since January. The weak performance in the energy markets as of late combined with rising corn costs have led to negative returns in the ethanol sector. Spot margins near the end of the week showed a loss of $0.56/bu. Despite the short term weakness, the ethanol sector has enjoyed a good year, prompting the USDA to adjust demand higher (+25 mbu) in Friday’s S&D report. FUNDS The Commitment of Traders report on Friday afternoon indicated that managed money continues reduce their short exposure and add long positions to the corn market. Through trading activity this past Tuesday, managed money was net long 149k contracts of corn. One month ago, this sector had a net position of -158k contracts. So in one month’s time this sector has accounted for 1.5 billion bushels of buying through outright new buying or via covering their record short position. Wow! For every buyer there is a seller, with end users taking the other side of that managed money buying. Producers have done an awful lot of selling in the last 30 days, as the local basis can attest. 2015 CORN December corn broke through resistance at $4.40 on Thursday, besting those highs from last December and closing above the mark to end trading on Friday. It’s the highest trade Dec ’15 in over a year and comes at a welcome time. Crop ratings and weather continue to drive the corn market as uncertainty around yield ideas remains prevalent. The funds have been a key piece as of late, defending their recent long positions and absorbing the hedge pressure caused by farmer selling. From a fundamental standpoint, the market is trading a December Corn Futures yield below the USDA’s 166.8 today. August will offer the first glimpse of the USDA’s realigned thoughts on the matter, with uncertainty likely to stretch on through harvest. Producers should continue to ask themselves some key questions as we sort out the details: What percent of my crop is marketed right now? Where would I like to be? Are these levels profitable after updating my yield estimates? Don’t fall asleep at the wheel! The market is offering us opportunities we have been waiting for all year. Simple HTA’s make sense for stored bushels.
Depending on your local basis, cash prices for next Jan-Feb could project at $4.25 using these types of contracts. Call your ProEdge Grain Specialist to place orders! 2016 CORN December 2016 corn marched modestly higher this week, adding 3’4 cents and finishing at $4.40’4. 2016 corn will certainly be impacted by the 2015 carryout, so some uncertainty surrounds it as well. We have always been advocates of protecting early profits should they present themselves; it’s never too early to run a budget for 2016. We understand that things will change, so build some cushion into your costs if you want to be safe. If a profit is attainable at today’s levels, we would encourage some percentage sales using HTA’s. If you are more inclined to having some upside, ask about putting a floor at-the-market. Call your ProEdge Grain Specialist or Risk Management Consultant for details! BASIS Basis values remain soft as the board marches higher. A small reprieve in the weakness may come at some point, but the strength of early summer is gone and not likely to return. Producers who will not be able to store their corn at home should consider some cash forward sales for harvest delivery. A good portion of our local area looks to have a good crop coming, which could mean a softer basis this fall. $4.00 harvest cash orders were filling this week – sell some $4.00 corn off the combine for some harvest cash flow! Call to place these orders next week! RECOMMENDATIONS Sell in increments on the way up. We no doubt have lost acres and yield to the east, but have a good crop coming in the west (knock on wood). Use the uncertainty as an opportunity to reduce some risk. The market does have the opportunity to continue working higher, but keep your expectations realistic. If you’d like to iron out some of the uncertainty, CVA does offer an averaging contract. This contract prices bushels at the closing market price every day over a period of time that you specify. Consider protecting some early profits for 2016 corn as well. HTA orders at $4.50 futures look pretty attractive!
SOYBEANS VOLATILE The soybean bulls didn’t like the crop ratings released on Monday afternoon, leading to a 30 cent loss on Tuesday and a -46 cent two day total. Those ideas shifted by late week as weather concerns continued to give the bulls a reason to buy. Friday’s S&D report saw tighter US carryout levels than what the trade thought, allowing soybeans to add to their gains and salvage the week. Despite the tighter balance sheet, the soybean market isn’t in any danger of running short this year. USDA projections for new crop are too high today, which the market is already accounting for. The question marks August Soybean Futures around new crop production will likely allow the soybean market to avoid any near term sell offs. For the week, August soybeans lost 6’2 cents to settle at $10.32’0.
CROP PROGRESS / CONDITION Soybean crop ratings disappointed the bulls on Monday afternoon, with many in the trade expecting further declines. NASS indicated that 63% of the US soybean crop was good/excellent, unchanged from the week prior. As with corn, conditions are segregated with the West doing the heavy lifting. ECB states saw their poor/very poor ratings work higher this week. The combined two category rating for select states: OH (18%), IN (21%), IL (16%), & MO (18%). Key states and their current deviation from average in terms of g/e rating: NE (-1), KS (-5), SD (+4), MN (+9), IA (+13), IL (-7), IN (-10), OH (-12), and MO (-18). As of Sunday night, Missouri had still only planted 73% of their soybean crop. Soybean blooming across the US was pegged at 21%, right on pace with the 5 year average. Editor’s Note: 40% of the nation’s soybean crop is above average in terms of g/e rating. Will states in the WCB be able to carry the national yield this year? It will be interesting to watch how the USDA accounts for the lost production – they have the ability to lower the national yield and reduce harvested acreage. With a wet year, I will be interested to see if the national yield doesn’t drop by quite as much as we expect? The biggest adjustment would then come in reduced harvested acreage. Either way you cut it, yield x harvested acres = production. How low will the market perceive production to get this growing season? Therein lies our opportunity.
Soybean Condition Nebraska Minnesota S Dakota Kansas Illinois Indiana Iowa Missouri Indiana US Total
This Week
Change vs LW
Last Year
69% 78% 74% 49% 52% 46% 78% 33% 46% 63%
+1 +1 +4 -3 -3 -
73% 61% 76% 62% 75% 71% 73% 76% 71% 72%
EXPORTS Soybean export sales were small this week at just 1.5 mbu, but within the range of expectations. Sales to date stand at 1,857 mbu vs 1,674 mbu a year ago at this time (+10.9%). The USDA revised exports higher on Friday (+15 mbu) to 1,825 mbu. The new total is still below the current “to-date” figure, so the USDA expects additional cancellations in the upcoming weeks. New crop sales totaled 7.4 mbu this week, with cumulative numbers continuing to trail the traditional pace. Soybean export inspections totaled 7.3 mbu this past week, bringing cumulative shipments to 1,767 mbu vs 1,569 mbu the year prior (+12.6%). In order to hit the USDA’ revised export estimate, weekly shipments will need to average 7.3 mbu over the remaining 8 weeks.
2015 CROP November soybeans had the trade guessing this week, as the crop ratings disappointed the bulls early in the week. A tighter old crop carryout makes the balance sheet less burdensome for next year, though looking at the USDA’s numbers on Friday you wouldn’t think so. The projected carryout number for 15/16 will shrink in August, but will it shrink to a level that the market is trading today? The soybean market could realize additional gains if the national yield comes in closer to 44 bpa than the 46 bpa being projected by the USDA today. Time will tell, but in the meantime, the November Soybean Futures volatility will likely continue. Producers who utilize harvest sales should take a look at their basis risk. A weak export program for 15/16 is being reflected in soft harvest basis values. To protect yourself from this, you could sell cash for the harvest time slot, or if you are bullish, utilize basis contracts. Talk to your ProEdge Grain Specialist for details here. If you haven’t done much with new crop soybean sales, understand that the euphoria surrounding the market is all supply based on the new crop side. Demand feels overstated today when we consider the size of the South American crop and what the USDA has projected for US exports next year. This likely isn’t a conversation until after harvest, but we need to keep things in perspective. Reward the market if you haven’t done so. Producers who will store on farm could utilize an HTA off the January futures. On the week, November futures lost 8’0 cents to settle at $10.22’2. 2016 CROP World carryout numbers were allowed to relax some on tighter old crop supplies in the US. Still, carryout projections for 15/16 remain healthy around the globe, and higher prices now are likely cementing acreage ideas for the South American producer. 2016 soybeans have been a slow mover as a result, modestly appreciating on our July run higher. Like our corn conversation, producers should run an early budget to get an idea of what it will take to hit desired profit goals. Once you have a number, ask your ProEdge Grain Specialist for ideas on the best way to sell. HTA’s in the $9.80 range should produce $9.00 cash off the combine in 2016. Or, consider utilizing our Triplex contract – grab $10.20 futures on a percentage sale of your 2016 crop. Futures at that level could produce $9.50 soybeans in the fall of 2016 depending on basis. Call today! BASIS Basis values remain soft around the landscape as processors are well covered through July and early August. Harvest values have backed up by as much as 15-20 cents in the past month on farmer selling and a weak export program. Producers worried about harvest basis can eliminate that risk by using basis contracts for fall delivery. Call your specialist to discuss your harvest plans! RECOMMENDATIONS Update your yield projections and refigure your breakevens to see what it will take this year. If you have profitable bushels on the table, reward the market for its efforts. There are question marks surrounding the soybean trade right now, so best of practice would be to place some offers and let the market go get them. Producers who will utilize CVA grain elevators in the fall should talk to their ProEdge Grain Specialist about cash sales or basis contracts. Even if you have a stretch order in mind, it doesn’t hurt to put the offer in!
WEATHER HEAT ON THE WAY Temperatures are set to heat up into the weekend with 90+ degree temps forecasted through Tuesday next week. Chances of showers and thunderstorms stretch throughout the weekend, with the best chance occurring on Friday night. Further out, the 610 day offers above normal temperatures AND precipitation for the WCB, while the ECB looks to be mostly normal in both categories.
Vegetative Health Index (VHI)
The vegetative health index map at right shows healthy vegetation for much of the Corn Belt, with northeast Nebraska sticking out. Comparing this chart to last year will show notable differences in the ECB, however, with conditions not as favorable relative to last year. Keep in mind that last year saw record yields out east, with the state of Illinois finishing the year with a 200 bpa state average!
6-10 Day Temperature
6-10 Day Precipitation
Risk Disclosure -The risk of loss in trading commodities can be substantial and past performance is not necessarily indicative of future results. Therefore, you should carefully consider whether such trading is suitable for you or your organization in light of your financial condition. Any examples given are strictly hypothetical and no representation is being made that any person will or is likely to achieve profits or losses similar to those examples. Neither the information, nor any opinion expressed shall be construed as an offer to buy or sell any futures or options on futures contracts.
JULY WASDE The July WASDE report was released Friday morning, incorporating stocks and acreage data from the June 30th reports. Below is a summary of the numbers. 14/15 WASDE
July Carryout (mbu)
Avg Estimate (mbu)
June Carryout (mbu)
July ARG Prod (mmt)
June ARG Prod (mmt)
July BZL Prod (mmt)
June BZL Prod(mmt)
14/15 World Carryout
June World Carryout
Corn
1,779
1,811
1,876
25.0
25.0
82.0
81.0
193.9
197.0
Soybeans
255
287
330
60.0
59.5
94.5
94.5
81.7
83.7
15/16 WASDE
July Carryout (mbu)
Avg Estimate (mbu)
Yield (bu/acre)
Planted Acres (million)
Production (mbu)
15/16 Usage (mbu)
July World Carryout (mmt)
Avg Estimate (mmt)
June World Carryout
Corn
1,599
1,540
*166.8
**88.9
13,530
13,735
189.9
193.0
195.2
Soybeans
425 842
370 861
*46.0 44.3
**85.1 56.1
3,885 2,148
3,744 2,189
91.8 219.8
91.9 200.4
93.2 202.4
Wheat
*Yield was left unchanged, but will be updated in the August S&D report **Acres were pulled from the June 30th Planted Acreage report
CORN The friendly June 30th Stocks report allowed the USDA to raise old crop feed demand 50 mbu this month. Combined with increases in ethanol (+25 mbu) and exports (+25 mbu), improved demand shrunk the 14/15 carryout by 97 mbu. The new crop balance sheet saw the USDA leave yield estimates unchanged, noting that updates would be available in their August 12th report. Acreage numbers were pulled from the June 30th acreage report, so the reduction in harvested acres allowed production estimates to decline 100 mbu for new crop corn. New crop demand projections saw feed (-25 mbu) and exports (-25 mbu) reduced, while ethanol added 25 mbu. The net effect was a reduction to the new crop carryout of 172 mbu – the market was looking for a little bit more. Our Take: The market is trading its own yield ideas right now, so the USDA leaving their number unchanged had little impact to the trade. It will be difficult to get an accurate feel on the national yield until we see the USDA’s thoughts on August 12th. Until then, crop ratings and the weather forecast through pollination will dictate whether we go higher or lower. Either way you cut it, corn feels supported based on the unknowns. SOYBEANS The old crop soybean balance sheet saw demand continue to work higher with crush and exports each adding 15 mbu on Friday. The June 30th stocks report confirmed a tighter soybean situation that some had suspected, which resulted in a 44 mbu increase to residual demand. This essentially means that the USDA overestimated the size of last year’s crop and they are accounting for it here. The result was a 75 mbu reduction to the old crop carryout. New crop saw acreage ideas come straight across from the acreage report in June, while yield was left untouched and will await August revisions. The higher acres from June bumped production higher (+35 mbu), but a smaller carry-in and an increase to crush demand (+10 mbu) led to a net reduction in the carryout by 50 mbu. However, at 425 mbu, the estimate was higher than pre-report thoughts. Our Take: The soybean market has acreage and yield questions right now, even after the updated acreage numbers in June. Until the USDA updates their thoughts on both of these categories, the market should have a hard time selling off. There seem to be too many question marks with soybeans right now to push them aggressively lower.
CORN FAN THE FLAMES The bullish pop of 2015 continued this past week, as September corn gathered enough buying interest to keep it well supported through report day. The July S&D confirmed the recent idea that old crop stocks are NOT growing, allowing September corn to close positively on Friday, adding 5’6 cents for the week at $4.34’2. Following the report numbers, September corn bested its highs from December, trading to its highest level in over a year. Basis values continue to temper the cash market, however, as local outlets are getting hit by heavy farmer sales of old crop corn. CROP PROGRESS / CONDITION Corn condition ratings were updated on Monday afternoon with expectations going in that good/excellent ratings would be flat. A one point improvement to the ratings was observed, with 69% of the US corn crop rated good/excellent. The market reacted negatively to the improvement for half of Tuesday’s session before shrugging off the data and resuming the bullish trade. Good vs poor conditions are clearly segregated by geography with the Western and Northern Corn Belt carrying the US crop. To that point, Poor/Very Poor crop ratings are interesting to look at for the ECB states: OH (15%), IN (21%), IL (12%), & MO (16%). Key states and their current deviation from average in terms of g/e rating: NE (-1), KS (+5), SD (+1), MN (+11), IA (+15), IL (+1), IN (-10), OH (-16), & MO (-3). Corn Silking stood at 12% on Monday afternoon vs 15% a year ago and 18% on average. Editor’s Note: The market is trying to wrap its arms around production ideas and right now, the problems in the ECB are outweighing the good looking crop in the West. A yield below trendline is being priced in right now and inquiring minds want to know, how low of a yield will the market perceive? This will present us with an opportunity to price additional bushels before the reality of that yield hits the market. At this point, the uncertainty is providing a great opportunity to market some grain.
September Corn Futures
Corn Condition Nebraska Kansas Illinois Iowa S Dakota Minnesota Indiana US Total
This Week
Change vs LW
Last Year
72% 55% 61% 82% 74% 84% 48% 69%
+2 -1 -1 -1 +2 +3 +1
72% 58% 80% 76% 80% 64% 75% 75%
FC Stone
FC Stone
EXPORTS Weekly export sales were within the range of expectations, coming in at 21.1 mbu. Cumulative sales stand at 1,819 mbu vs 1,873 a year ago (-2.9%). The USDA’s recent revision higher in export demand (+15 mbu) means that weekly sales will need to average 5.13 mbu each week over the remaining 8 weeks. Corn export inspections totaled 33.0 mbu this past week, towards the bottom end of trade estimates. The recent shipment pace has been respectable, with cumulative inspections standing at 1,447 mbu vs 1,540 mbu a year ago (-6.0%). In order to hit the USDA’s revised estimate, weekly shipments will need to average 34 mbu over the remaining 8 weeks. ETHANOL Ethanol production for the week ending July 3rd was pegged at 987k barrels per day, up from 968k barrels/day the previous week. That production rate was good enough to chew through 103 mbu of corn, the 8th straight week of 100+mbu. Stocks rose slightly (+13 mln gal) but overall have declined steadily since January. The weak performance in the energy markets as of late combined with rising corn costs have led to negative returns in the ethanol sector. Spot margins near the end of the week showed a loss of $0.56/bu. Despite the short term weakness, the ethanol sector has enjoyed a good year, prompting the USDA to adjust demand higher (+25 mbu) in Friday’s S&D report. FUNDS The Commitment of Traders report on Friday afternoon indicated that managed money continues reduce their short exposure and add long positions to the corn market. Through trading activity this past Tuesday, managed money was net long 149k contracts of corn. One month ago, this sector had a net position of -158k contracts. So in one month’s time this sector has accounted for 1.5 billion bushels of buying through outright new buying or via covering their record short position. Wow! For every buyer there is a seller, with end users taking the other side of that managed money buying. Producers have done an awful lot of selling in the last 30 days, as the local basis can attest. 2015 CORN December corn broke through resistance at $4.40 on Thursday, besting those highs from last December and closing above the mark to end trading on Friday. It’s the highest trade Dec ’15 in over a year and comes at a welcome time. Crop ratings and weather continue to drive the corn market as uncertainty around yield ideas remains prevalent. The funds have been a key piece as of late, defending their recent long positions and absorbing the hedge pressure caused by farmer selling. From a fundamental standpoint, the market is trading a December Corn Futures yield below the USDA’s 166.8 today. August will offer the first glimpse of the USDA’s realigned thoughts on the matter, with uncertainty likely to stretch on through harvest. Producers should continue to ask themselves some key questions as we sort out the details: What percent of my crop is marketed right now? Where would I like to be? Are these levels profitable after updating my yield estimates? Don’t fall asleep at the wheel! The market is offering us opportunities we have been waiting for all year. Simple HTA’s make sense for stored bushels.
Depending on your local basis, cash prices for next Jan-Feb could project at $4.25 using these types of contracts. Call your ProEdge Grain Specialist to place orders! 2016 CORN December 2016 corn marched modestly higher this week, adding 3’4 cents and finishing at $4.40’4. 2016 corn will certainly be impacted by the 2015 carryout, so some uncertainty surrounds it as well. We have always been advocates of protecting early profits should they present themselves; it’s never too early to run a budget for 2016. We understand that things will change, so build some cushion into your costs if you want to be safe. If a profit is attainable at today’s levels, we would encourage some percentage sales using HTA’s. If you are more inclined to having some upside, ask about putting a floor at-the-market. Call your ProEdge Grain Specialist or Risk Management Consultant for details! BASIS Basis values remain soft as the board marches higher. A small reprieve in the weakness may come at some point, but the strength of early summer is gone and not likely to return. Producers who will not be able to store their corn at home should consider some cash forward sales for harvest delivery. A good portion of our local area looks to have a good crop coming, which could mean a softer basis this fall. $4.00 harvest cash orders were filling this week – sell some $4.00 corn off the combine for some harvest cash flow! Call to place these orders next week! RECOMMENDATIONS Sell in increments on the way up. We no doubt have lost acres and yield to the east, but have a good crop coming in the west (knock on wood). Use the uncertainty as an opportunity to reduce some risk. The market does have the opportunity to continue working higher, but keep your expectations realistic. If you’d like to iron out some of the uncertainty, CVA does offer an averaging contract. This contract prices bushels at the closing market price every day over a period of time that you specify. Consider protecting some early profits for 2016 corn as well. HTA orders at $4.50 futures look pretty attractive!
SOYBEANS VOLATILE The soybean bulls didn’t like the crop ratings released on Monday afternoon, leading to a 30 cent loss on Tuesday and a -46 cent two day total. Those ideas shifted by late week as weather concerns continued to give the bulls a reason to buy. Friday’s S&D report saw tighter US carryout levels than what the trade thought, allowing soybeans to add to their gains and salvage the week. Despite the tighter balance sheet, the soybean market isn’t in any danger of running short this year. USDA projections for new crop are too high today, which the market is already accounting for. The question marks August Soybean Futures around new crop production will likely allow the soybean market to avoid any near term sell offs. For the week, August soybeans lost 6’2 cents to settle at $10.32’0.
CROP PROGRESS / CONDITION Soybean crop ratings disappointed the bulls on Monday afternoon, with many in the trade expecting further declines. NASS indicated that 63% of the US soybean crop was good/excellent, unchanged from the week prior. As with corn, conditions are segregated with the West doing the heavy lifting. ECB states saw their poor/very poor ratings work higher this week. The combined two category rating for select states: OH (18%), IN (21%), IL (16%), & MO (18%). Key states and their current deviation from average in terms of g/e rating: NE (-1), KS (-5), SD (+4), MN (+9), IA (+13), IL (-7), IN (-10), OH (-12), and MO (-18). As of Sunday night, Missouri had still only planted 73% of their soybean crop. Soybean blooming across the US was pegged at 21%, right on pace with the 5 year average. Editor’s Note: 40% of the nation’s soybean crop is above average in terms of g/e rating. Will states in the WCB be able to carry the national yield this year? It will be interesting to watch how the USDA accounts for the lost production – they have the ability to lower the national yield and reduce harvested acreage. With a wet year, I will be interested to see if the national yield doesn’t drop by quite as much as we expect? The biggest adjustment would then come in reduced harvested acreage. Either way you cut it, yield x harvested acres = production. How low will the market perceive production to get this growing season? Therein lies our opportunity.
Soybean Condition Nebraska Minnesota S Dakota Kansas Illinois Indiana Iowa Missouri Indiana US Total
This Week
Change vs LW
Last Year
69% 78% 74% 49% 52% 46% 78% 33% 46% 63%
+1 +1 +4 -3 -3 -
73% 61% 76% 62% 75% 71% 73% 76% 71% 72%
EXPORTS Soybean export sales were small this week at just 1.5 mbu, but within the range of expectations. Sales to date stand at 1,857 mbu vs 1,674 mbu a year ago at this time (+10.9%). The USDA revised exports higher on Friday (+15 mbu) to 1,825 mbu. The new total is still below the current “to-date” figure, so the USDA expects additional cancellations in the upcoming weeks. New crop sales totaled 7.4 mbu this week, with cumulative numbers continuing to trail the traditional pace. Soybean export inspections totaled 7.3 mbu this past week, bringing cumulative shipments to 1,767 mbu vs 1,569 mbu the year prior (+12.6%). In order to hit the USDA’ revised export estimate, weekly shipments will need to average 7.3 mbu over the remaining 8 weeks.
2015 CROP November soybeans had the trade guessing this week, as the crop ratings disappointed the bulls early in the week. A tighter old crop carryout makes the balance sheet less burdensome for next year, though looking at the USDA’s numbers on Friday you wouldn’t think so. The projected carryout number for 15/16 will shrink in August, but will it shrink to a level that the market is trading today? The soybean market could realize additional gains if the national yield comes in closer to 44 bpa than the 46 bpa being projected by the USDA today. Time will tell, but in the meantime, the November Soybean Futures volatility will likely continue. Producers who utilize harvest sales should take a look at their basis risk. A weak export program for 15/16 is being reflected in soft harvest basis values. To protect yourself from this, you could sell cash for the harvest time slot, or if you are bullish, utilize basis contracts. Talk to your ProEdge Grain Specialist for details here. If you haven’t done much with new crop soybean sales, understand that the euphoria surrounding the market is all supply based on the new crop side. Demand feels overstated today when we consider the size of the South American crop and what the USDA has projected for US exports next year. This likely isn’t a conversation until after harvest, but we need to keep things in perspective. Reward the market if you haven’t done so. Producers who will store on farm could utilize an HTA off the January futures. On the week, November futures lost 8’0 cents to settle at $10.22’2. 2016 CROP World carryout numbers were allowed to relax some on tighter old crop supplies in the US. Still, carryout projections for 15/16 remain healthy around the globe, and higher prices now are likely cementing acreage ideas for the South American producer. 2016 soybeans have been a slow mover as a result, modestly appreciating on our July run higher. Like our corn conversation, producers should run an early budget to get an idea of what it will take to hit desired profit goals. Once you have a number, ask your ProEdge Grain Specialist for ideas on the best way to sell. HTA’s in the $9.80 range should produce $9.00 cash off the combine in 2016. Or, consider utilizing our Triplex contract – grab $10.20 futures on a percentage sale of your 2016 crop. Futures at that level could produce $9.50 soybeans in the fall of 2016 depending on basis. Call today! BASIS Basis values remain soft around the landscape as processors are well covered through July and early August. Harvest values have backed up by as much as 15-20 cents in the past month on farmer selling and a weak export program. Producers worried about harvest basis can eliminate that risk by using basis contracts for fall delivery. Call your specialist to discuss your harvest plans! RECOMMENDATIONS Update your yield projections and refigure your breakevens to see what it will take this year. If you have profitable bushels on the table, reward the market for its efforts. There are question marks surrounding the soybean trade right now, so best of practice would be to place some offers and let the market go get them. Producers who will utilize CVA grain elevators in the fall should talk to their ProEdge Grain Specialist about cash sales or basis contracts. Even if you have a stretch order in mind, it doesn’t hurt to put the offer in!
WEATHER HEAT ON THE WAY Temperatures are set to heat up into the weekend with 90+ degree temps forecasted through Tuesday next week. Chances of showers and thunderstorms stretch throughout the weekend, with the best chance occurring on Friday night. Further out, the 610 day offers above normal temperatures AND precipitation for the WCB, while the ECB looks to be mostly normal in both categories.
Vegetative Health Index (VHI)
The vegetative health index map at right shows healthy vegetation for much of the Corn Belt, with northeast Nebraska sticking out. Comparing this chart to last year will show notable differences in the ECB, however, with conditions not as favorable relative to last year. Keep in mind that last year saw record yields out east, with the state of Illinois finishing the year with a 200 bpa state average!
6-10 Day Temperature
6-10 Day Precipitation
Risk Disclosure -The risk of loss in trading commodities can be substantial and past performance is not necessarily indicative of future results. Therefore, you should carefully consider whether such trading is suitable for you or your organization in light of your financial condition. Any examples given are strictly hypothetical and no representation is being made that any person will or is likely to achieve profits or losses similar to those examples. Neither the information, nor any opinion expressed shall be construed as an offer to buy or sell any futures or options on futures contracts.
