Afternoon Comments 8/7/2013
Wednesday, August 7, 2013, 3:17 pmSubmitted by: Kyle Lehman
If you look back through your comments over the past 12 or so trading sessions you will see a common theme..markets lower and non-threatening weather. Well today is nothing new so I won’t bore you with the same story that has been told the past several weeks. However, the bearish tone of cooler temperatures may start to turn bullish if the trend continues. Talks have started to shift over to a late planted crop with development weeks behind normal being very susceptible to an early frost/freeze. If the below normal temperature trend persists could we see an early frost? Only time will tell.
Ethanol data this week was neutral although production did pick up 2.5% from last week. Corn used this week for ethanol production was 89.6 mln bu vs 103.1 mln needed to reach the USDA projection. At this point it is unlikely the USDA projection will be reached considering many ethanol plants are scheduled for maintenance down time the next two months. China approved the importation on GMO from Argentina today which will add a little pressure to US markets where corn is currently 50-75 cents higher priced than South America and the Black sea region.
August weather outlook continues to look favorable for soybean development providing the continued bearish tone. Similar to corn the market will watch for any indication of an early frost which could be more detrimental to soybeans where a significant portion didn’t get planted until late June/early July. USDA announced yet another new crop soybean purchase from China of 220k MTs.
Outside markets were mixed with the dollar and equities trading lower on uncertainty of when/if the fed will begin to reduce the QE3 bond buyback program. Crude traded weaker today while metals mostly higher.
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