AM Comments 08/16/13
Friday, August 16, 2013, 8:24 amSubmitted by: Dustin Weiner
Good morning!
Yesterday we were given a very nice futures rally and the market relaxed a bit overnight – trading a little weaker in corn, soybeans and wheat. As of right now, Nov beans are approximately 80c higher than they were at the close a week ago today. Corn’s rally hasn’t been quite as impressive, but it is 13c higher than a week ago and Dec corn slipped above its 20-day moving average yesterday (the 1st time since June that has happened).
The story is pretty simple – the market is starting to truly question the USDA’s production estimates for next year. Prevent plant acres were the story yesterday (it surprised a few in the trade, although not everyone) and some are really starting to wonder about potential soybean yields… largely due to the warmer weather forecasted for next week with no sign of moisture in the 10-day outlook.
Speaking of weather… the 6-10 day outlook shows a return to normal temps with below normal moisture for most of the Midwest. The longer term forecasts look similar, maybe even above normal in temps with normal to below normal precip.
In biofuel news, yesterday the U.S. gov’t inaugurated a plan to boost low sugar prices and mitigate a costly sugar surplus. In this “Sugar for Ethanol” program they will buy unwanted sugar and sell it at a loss to ethanol makets to produce more biofuels. This is the first time the Ag Dept. used the Feedstock Flexibility Program with the goal of making sugar into a biofuel feedstock (similar to what they do in Brazil). Some are thinking that 60-70 million bushels of corn demand could be displaced by sugar.
Opening Calls
Corn down 3 to 4 cents
Soybeans down 3 to 4 cents
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