Blogging by the Bushel
With numerous challenges over the past several years for producers, we at Mercer Landmark understand the need for a comprehensive risk management solution. We seek to provide our customers with unparalleled service to ensure maximum results.

Archive for August, 2017

Market Report

Wednesday August 30th, 2017

December 17 corn closed down 3 ¼ at $3.45 ½ and March 18 closed down 3 ¼ at $3.58 ¼. November beans closed down 4 at $9.33 ¼ and January 18 closed down 3 ¾ at $9.42 ¾. December wheat closed unchanged at $4.29 ¾ and July 18 closed up 1 ½ at $4.78 ½. Crude oil closed down $.49 at $46.51.

The corn market finished lower today, extending the slide to ten out of the last twelve sessions. Unlike the past few days, there was not much of an effort to rally the markets intraday, as we seemed to follow a broad “downtick, then stabilize” trend.  The funds were viewed net sellers of roughly 12,000 contracts today, which would take their net short in the market to an estimated 135,000 contracts. Outright volumes were not substantial, but spread volumes were massive. Over 120,000 Sept/Dec corn spreads traded today ahead of First Notice Day for delivery tomorrow. Corn continued its march lower, as we await the start of the Midwest harvest next month. Frost potentials and Hurricane Harvey remain the only two significant weather topics of note.  On the former point, the cold is still in the forecast, but spot checks of some upper Midwest locations show temperature expectations that should stay north of freezing. Still, the potential is there, and the market is very much acting like there is no risk whatsoever. One positive sign of stability in the grain markets came from the European (Matif) wheat, which featured positive trade today and may have left behind an island bottom on the daily chart.

The soybean market continued lower for a fourth consecutive session. While flat price gives back some of its recent recovery the feature trades were all spread related. USDA flashed 131 mt of beans sold to China – in the past week there have been 877 mt of new crop sales announced. Demand is strong at these price relationships. A wildcard on production is the potential for a frost event across the upper Midwest next week as much below normal temps move in from Canada spread out through the Great Lakes region and brings the risk of crop damaging cold.   Looking at the local forecasts for Madison, WI and Marshall, MN we don’t see temps reaching below 44 degrees for a low during this stretch but this cold spell will need to be monitored because a frost ending the soybean growing season early in those areas would change the marketplace.

The wheat complex finished the night higher across the board, but once again we saw the markets struggle to hold overnight strength. Price action today looked very similar to what we saw yesterday, with continued liquidation in the intra-market wheat spreads between Mpls and Chicago and Mpls and KC. Spring wheat prices did not fall as much as they did on Tuesday, but they did slip to almost ten cents lower before rebounding late. Both Chicago and KC hovered around unchanged much of the day, but KC settled the strongest as for the second day in a row we saw strong buying on the close. As we look ahead to tomorrow, it will be interesting to see if we get that late buying again as first notice day tends to be a weak day for trade. Have a little business around as we end the week as Japan is in for their usual weekly tender overnight, and Tunisia is in as well. Data from Stats Can may be a little more influential than normal, with the biggest question being will they trend similarly to the US and be a little higher than expected and adjust later.

Anna Kaverman

anna@mercerlandmark.com

Market Report

Tuesday August 29th, 2017

September corn closed down 2 ½ at $3.33 ½ and December 17 corn closed down 2 ¼ at $3.48 ¾. November beans closed down 4 at $9.37 ¼ and January 18 closed down 3 ¾ at $9.46 ½. September wheat closed up 2 ¾ at $4.02 ¾ and July 18 closed up ½ at $4.80. Crude oil closed up $.04 at $47.00.

The corn market finished 2-3 cents lower Tuesday. Again. Broken record, indeed. The corn market has declined nine out of the last eleven sessions, skidding to a new low for the year.  Turnaround Tuesday failed to materialize despite an encouraging mid-day bounce. The funds were viewed net sellers of another 10,000 contracts today, which would take their net short in the market close to 125,000. The selling in the markets of late have taken on a more “structural” feel than anything necessarily tied to specific fundamental inputs of the day. Funds appear to want to build back up their short position lost amid summer weather volatility, while farmers are quickly running out of time to price old crop bushels locked up in DP/storage. The end result has been a slow, quite relentless, sell-off. In fact, one could make the argument that some of the weather influences around are modestly friendly and warrant some risk premium. Additional model runs have backed up earlier GFS forecasts that suggest a frost event may impact the upper Midwest in mid-September.  The weekly crop progress report from Monday found 86% of the crop was in the dough stage, while 44% was dented, both behind last year and average.  Need to get to black layer to prevent some yield loss amid a frost. There is also September contract positioning around, as traders jostle to avoid a delivery situation Wednesday night. Mexico continues to help the export cause as they were back in for another 226,000 metric tons this morning, taking their two day take to nearly 400,000 corn.

The soybean market followed through on the outside day reversal yesterday after touching initial resistance against the $9.50 area and the chart tries to shift its momentum lower. If beans are going to join the other grains in seeking deeper levels of support, technical targets would be the recent $9.21 low followed by open objectives in the $9.07 to $9.00 area on November. Increasing crop ratings and generally benign – although not perfect like last year – weather conditions have the market thinking yields are increasing which is limiting the recovery rally. That recovery has been built on the recent demand developments. Demand is good, China is back in our markets including today’s USDA flash sale 198 mt 17/18 beans sold to China. A wildcard on production yet is the potential for a frost event across the upper Midwest starting a week or 10 days out as much below normal temps move in from Canada spread out through the Great Lakes region and brings the risk of crop damaging cold that will be watched closely.  Government maps this afternoon are showing colder and drier for the 6-10 day and 8-14 day outlooks suggesting a less than ideal scenario for finishing crops with the key being how cold temps dip with a potential frost.

The wheat complex was $.04-$.07 lower overnight, but someone was there to buy the opening in both Chicago and KC, and that turned out to be a sign for things to come the rest of the day. Some Mpls longs probably remember how illiquid the Spring market was when they were entering the trade, and today they saw much of the same type of flow while exiting. Sellers were also light when they tried to cover shorts in Chicago. Results of the Egyptian tender came out midday. Not surprising, the US did not win any business. US futures are about $15 a ton lower over that period. but US soft wheat at $100 over would land at around $216. That means the US was around $15 dollars out from winning any business. The US was only around six dollars out in the GASC’s tender two weeks ago, so while World wheat prices fall, the US is getting even less competitive.

Anna Kaverman

anna@mercerlandmark.com

Market Report

Friday August 25th, 2017

September corn closed down 3 ¼ at $3.38 ¾ and December 17 corn closed down 2 ¾ at $3.53 ½. November beans closed down 2 at $9.44 ½ and January 18 closed down 1 ¾ at $9.53 ½. September wheat closed up ½ at $4.09 ½ and July 18 closed up ½ at $4.85 ½. Crude oil closed up $.42 at $48.12.

FOR THE WEEK ENDED 8-25-17

Corn closed unchanged or lower every day this week as weather issues were pushed to the sidelines, seasonal pressure kicked in, and the Farm Journal Midwest Crop Tour didn’t hold any big surprises. New contract lows were seen in the September at $3.38, December at $3.52 ½, and March at $3.65 ½ per bushel.  In post-weekly export sales trading, corn was able to grab the coattails of soybeans to stop the bleeding for a short time.  Traders are still anticipating lower corn yields than the USDA’s 169.5 BPA August projection, and the crop tour was confirming that direction.  However, the crop tour has a history of underestimating the final USDA yield and there haven’t been any disastrous pictures or stories from the road.  Last year, December 2016 corn made its contract low on August 31, 2016 at $3.14 ¾ per bushel.  Seasonally, corn trends lower in September. Old crop corn is still being sold across the scale at elevators around the Midwest.  None of this inspires thoughts for a quick corn rally.

The crop tour estimated the US corn yield at 167.1 BPA compared to the August USDA 169.5 BPA forecast.  They pegged US corn production at 13.953 billion bushels versus the USDA’s 14.153 billion bushels.  The tour’s corn yield estimate for the US has been below the USDA’s final number for five straight years.

As expected, Brazil approved a 20% tax on ethanol imports over 600 million liters annually (160 million gallons).  In the first six months of the calendar year, Brazil’s ethanol imports were up 330% from the previous year. The US has exported 276 million gallons to Brazil from January through June 2017.  The tax is set to be in place for two years, at which time it will be re-evaluated, according to their Agriculture Ministry.  US weekly ethanol production was down slightly from 1.059 million bpd to 1.052 million bpd.

Weekly exports were lackluster at 4 million bushels for old crop and 16.7 million bushels for new crop.  Old crop sales total 2.227 billion bushels compared to the USDA projection for 2.225 billion bushels.  Total new crop commitments of 242.6 million bushels are only 55% of where we were last year and are at the lowest point for mid-August in the last 12 years.  New crop sales are only 13% of the USDA’s 1.850 billion bushel outlook compared to 24% on average at this time of year.

Contrary to corn, soybeans extended the uptrend that began last week as demand reappeared for new crop, and the crop tour was consistent in finding lower pod counts than last year.  Old crop export sales cancellations were announced early in the week, but new crop sales were there to take their place.  China is thought to need to purchase a significant quantity for October shipment and the US is competitive with South America for that time slot.  The belief that soybean yields will still benefit from rainfall likely limited the upside.

The Farm Journal Midwest crop tour estimated the US soybean yield at 48.5 BPA and production at 4.331 billion bushels.  In their calculations, they raised harvested soybean acreage by 500,000 acres to 89.231 million acres.  The USDA’s August balance sheet used a yield of 49.4 BPA for production of 4.381 billion bushels.  The numbers will likely be viewed as bearish since the tour has underestimated the final yield number in each of the last five years.

Weekly export sales for old crop were net cancellations of 14.7 million bushels, bringing total old crop commitments to 2.231 billion bushels.  Assuming 75-85 million bushels will get rolled over into new crop, this year’s export category is in line with the USDA’s August forecast of 2.150 billion bushels.   New crop sales were impressive at 73.8 million bushels.  This brings total new crop commitments to 365 million bushels.  This is still well below last year’s 635 million bushels on the books in mid-August and remains the 9th lowest total for this time of year.

The US Department of Commerce is initiating import duties of 64%-68% on Argentine imports and a 41%-66% tax on Indonesian biodiesel imports after finding they benefit from subsidies in their countries of origin and from the US RFS program.  This is expected to shut-off biodiesel imports from those countries.  The tariff rates were higher than the 40% tariff the trade had been expecting.  In response, Argentina said they will explore all available options of possible legal action.

The wheat markets spent most of the day higher on rising US export interest but turned lower to end the trading session. US wheat shipping disruptions will be likely in the next few days as hurricane Harvey made landfall in Texas.  Russia will supply 200,000 tons of milling wheat to Bangladesh between September and December. Algeria bought 590,000 tons of milling wheat for November shipment. This helped the European wheat futures to rise Friday, erasing losses that began at the beginning of the week and culminated in contract lows on Wednesday. The European Union’s expected 2017/18 wheat crop production was lifted to 139.4 million tons from 138.6 million tons a month ago.

Anna Kaverman

anna@mercerlandmark.com

Farm Journal Pro Farmer US Midwest 2017 Crop Tour production and yield headline re-cap

Corn: 13.953 billion bu.; Average yield of 167.1 bu. per acre

Soybeans: 4.331 billion bu.; Average yield of 48.5 bu. per acre

In August, the USDA was:

Corn 169.5 BPA, production 14.153 billion bushels

Beans 49.4 BPA, production 4.381 billion bushels

Market Report

Thursday August 24th, 2017

September corn closed unchanged at $3.42 and December 17 corn closed up ½ at $3.56 ¼. November beans closed up 8½ at $9.46 ½ and January 18 closed up 8 ½ at $9.55 ¼. September wheat closed up 5 ¾ at $4.09 and July 18 closed up 3 at $4.85. Crude oil closed down $.92 at $47.70.

Well, at least corn didn’t close lower. Even by corn standards, today was quiet, trading in a two cent range and average volume.  Corn settled fractionally higher by days’ end. Managed Money traders were estimated net buyers of just under 5,000 contracts today, likely as the pending hurricane may have made some a little nervous. Their corn net short is now roughly 75,000 contracts, though it will be interesting to see where they land in tomorrow’s CFTC data, as we ran through a few downside options strikes over that timing. The focus of weather-watchers will be Hurricane Harvey, the outlook of which continues to evolve. The major concern near-term will be disruptions to Gulf export operations and the southern corn harvest. Next week, it will be interesting to see if this ends up producing any extra rain for the Midwest, particularly the new dry areas of the Eastern Belt. “Crop Tour Week” grinds on. A private crop tour pegged Central Illinois yields at 183 bpa, which is down more than 10% from last year’s 211 bpa. The headline Farm Journal tour found a state-wide Illinois yield of 180.7 bpa,mwhich is down from 187.3 bpa last year, 188 bpa from the USDA in Aug, and last year’s final of 197 bpa. Western Iowa yields were found roughly 179 bpa with full state results due out later.  Minnesota is next up, and they should be a garden spot. The final national yield estimate from them will be released Friday afternoon.

The soybean market continued higher with a new high close for the recovery trade. So far, this recovery trade has been supported by demand with the resumption of Chinese exports (50 cargoes out of the Gulf over the previous two weeks) and the trade duties placed on biodiesel imports that will shut them down and need to be made up with increased soybean oil usage. Today, we have a supply side input as Hurricane Harvey approaches the Texas coast and looks to dump large amounts of rain up into the Delta and cause delays to harvest activity.  This has some looking to cover cash sales as bushels that were supposed to be available now appear like they may be delayed.  Make no mistake, unless we get a frost/freeze event the upside potential should be limited and a bull market we are not entering. The US crop is really big thanks to pretty good August conditions for many and sheer acreage to pick up the slack for those that weren’t so lucky. So maybe not record, but probably not far off either and any supply disruption would be very temporary.

The wheat complex enjoyed modest overnight gains, but during the first few hours of the day the markets were following its recent trend in not holding overnight strength. Coming into this morning there was not a lot of friendly news around. Export sales were at the low end of expectations, the IGC raised its World wheat estimates and SovEcon increased their country’s wheat estimates – although the latter two go almost hand in hand and there already has been a lot of talk about the size of the Russian wheat crop. There is some business around as we end the week, and the US is getting much more competitive with the rest of the World. Maybe the US won some of the Algerian business? French wheat looks as if they are priced out, and Algeria was on the export sales report a few weeks ago picking up a cargo of US wheat. We have talked in depth this week about the wheat market hinting that it might be nearing a bottom, and it is easy to get excited after a day like today, but we first have to build off today’s reversal after another move into new contract lows, so a higher close tomorrow will be important. Export sales this morning were at the low end of expectations, coming in at 386 MT.

Anna Kaverman

anna@mercerlandmark.com

Market Report

Wednesday August 23rd, 2017

September corn closed down 4 at $3.42 and December 17 corn closed down 4 ¼ at $3.55 ¾. November beans closed up ½ at $9.38 and January 18 closed up 1 at $9.46 ¾. September wheat closed up 1 at $4.03 ¼ and July 18 closed up ½ at $4.82. Crude oil closed up $.60 at $48.62.

Corn remains nothing if not consistent, continuing its slow, yet relentless, descent to new lows. The pre-harvest bottom sure can’t come soon enough for suffering longs. Once more, corn tried to rally a little overnight, but struggled to stay in the green during the day. Corn would eventually close $.04 lower, erasing the old contract lows in December made last year at this timing. The funds were estimated net sellers of another 15,000 contracts today, which would put them net short roughly 80,000 contracts. After a relatively rosy start, the Farm Journal tour ran into problems toward the center of the Midwest. Iowa & Illinois yield projections have been among the most difficult to gauge, given variable field conditions and spotty rain coverage over the area. Results reported tonight into tomorrow could be interesting. So far, yields in Nebraska, Indiana, and Ohio, have all trended above recent averages, while South Dakota held up decently (148 bpa vs. 156 bpa average and 161 last year).  Though we will take the results with a big grain of salt, the day-to-day issuances will continue to be the major scuttlebutt around the corn market.

On the weather front, today’s forecast includes less rain for southern parts of the eastern Corn Belt, as the track of soon-to-be tropical storm Harvey has been shifted southward. The heavy rain could wreak havoc with southern crops/harvest. The remainder of the two-week outlook for the Midwest has not changed much since Monday and much of the Corn Belt will see a restricted rainfall pattern through the next ten days to two weeks with only two rounds of well-organized rain expected.  Tuesday was cooler with rain reported in some southern and eastern parts of the Midwest.  Below-average temps are expected to persist well into early September. As noted before, there is little scope to change US corn yields much, beyond kernel fill.

The soybean market ended the day a touch better in another two-sided light volume session but showcased its challenge in holding strength closing $.09 off the day’s high. Beans remain in a near term corrective posture following the recent slide off the July highs and appear to have found some stability first with the resumption of Chinese export demand in the past few weeks and now with the implications of the trade duties slapped on Argy and Indo biodiesel imports which increases our domestic soy oil demand as a feedstock going forward. On the recovery, look for resistance starting in the $9.50 to $9.60 area while a 38% retracement target would be $9.69. With the old crop export season winding down, the USDA announced a cancellation of 641 mt of old crop bean sales to China. They announced new sales of 11 mt old crop to unknown and 284 mt new crop to unknown.

The Pro Farmer crop tour continues through IA today which is a key location due to drought and hot temps during pollination.  Tomorrow they wrap up in Rochester, MN where they will publish their final yield estimates based off the actual tour data and other inputs including variability. The results that have been seen are a mixed bag with some good and some bad crops and in general better than anticipated overall. Tough to quantify relative to the USDA because of different methodologies that end up with different results. Pro Farmer over recent 5 year history has been below the USDA final in each of their corn and soybean yield estimates.

The wheat complex enjoyed modest overnight gains, and was even able to extend those gains during the morning, but in a pattern seen all too often lately, trade was unable to carry that strength through the day. Chicago wheat managed to eke out small gains, but not before trading into new contract lows. Trade still seems to be fighting off some long liquidation in KC, but a quick technical look at KC shows daily chart indicators deeply oversold with an RSI of 11 – when was the last time someone saw an RSI of under 10. Tomorrow morning we may get another hint with the export sales report. With the lower prices, US wheat should be getting more competitive with the rest of the world. A strong export sales report will only reinforce that idea. Look for sales to be similar to last week, which came in at 634 MT.

Anna Kaverman

anna@mercerlandmark.com

Market Report

Tuesday August 22nd, 2017

September corn closed down 3 at $3.46 and December 17 corn closed down 3 at $3.60. November beans closed up 1 ¼ at $9.37 ½ and January 18 closed up 1 ¼ at $9.45 ¾. September wheat closed down 7 ¼ at $4.02 ¼ and July 18 closed down 6 ¾ at $4.81 ½. Crude oil closed up $.34 at $48.02.

More of the same old, same old, in corn. The market did its utmost to bounce overnight, but quickly pushed back lower when US traders showed up to play. The end result was a $.03 lower finish for the market, finishing at a new spot low for the calendar year, and brought Dec within its life-of-contract low.  The funds were estimated net sellers of 15,000 contracts today, which is a somewhat remarkable feat given only about 150,000 contracts traded outright. This would put them net short roughly 65,000 contracts. “Rain makes grain,” even when it doesn’t, apparently. Another shot of relatively widespread rain in Iowa and some of the driest areas of Missouri, along with a narrow band in Central Illinois, tended to put traders back in a funk after a small 1-2 cent higher overnight performance.  Early morning, Pro Farmer published results from Day 1 of the Tour.  They found South Dakota yields at 148 bpa vs. 156 bpa average (and 161 last year); Ohio yields were pegged 164.6 bpa vs. 159.8 bpa average (and 159 last year).  Today, scouts on the western leg through SE Nebraska pegged corn yields at 171.2 bpa for five fields. Those areas last year were 155.0 bpa and the long term average for that particular region was 159.2 bpa.  Scouts in the eastern leg through Indiana found variable yields – five fields averaged at 168.7 bpa, which compares to 176.1 bpa last year and 167.4 bpa three year average.  Note, the correlation to final USDA yields is usually relatively poor (they tend to understate yield).

The soybean market settled slightly better on the day in another quiet two-sided trade. The market lacks rally power with recent rains in the western belt that have been highly beneficial to soybean yield potential but oversold charts and resurgent export trade to China have helped stabilize the downside for a moment.  The Pro Farmer crop tour continues meeting up in Bloomington IL and Nebraska City NE, tonight. Tomorrow both legs venture through IA and on Thursday they wrap up in Rochester, MN. The results that have been released have been a mixed bag with some good and some bad crops and in general better than anticipated overall. Tough to quantify relative to the USDA because of different methodologies that end up with different results. PF over recent history has been below the USDA final in their corn and soybean yield estimates.

The wheat complex tried to bounce overnight, with Mpls trading out to $.06 higher and Chicago and KC posting $.03-$.04 gains. But as has been the trend recently, overnight strength has been difficult to hold. When the day session began the selling only intensified and price action traded on the defensive the rest of the day. Once again both the SRW and HRW wheat contracts settled into new contract lows. Matif also settled into new contract lows again, as trade there seemingly has made new contract lows every day for the past two weeks. Much of this weakness has been attributed to a growing Russian wheat crop and increased export expectations, combined with Black Sea Values continuing to slip lower. We also have seen selling pressure from longs exiting both KC and Mpls. But as we look forward, much of the length left in KC could very well be against shorts in Chicago and the huge Russian crop is now probably priced into the market. There are some problem areas around the World for wheat. Australia has had to deal with freezing temps, Germany has had a deluge of rain that has hampered their harvest and reduced their crop some.

Anna Kaverman

anna@mercerlandmark.com

Market Report

Monday August 21st, 2017

September corn closed down 3 at $3.49 and December 17 corn closed down 2 ¾ at $3.63. November beans closed down 1 ½ at $9.36 ¼ and January 18 closed down 1 ¼ at $9.44 ½. September wheat closed down 6 ½ at $4.09 ½ and July 18 closed down 4 ¾ at $4.88 ¼. Crude oil closed down $1.13 at $47.53.

“Sinky and stinky” continues to be the trend in corn, as spot futures started off the new week by skidding to new lows for the year. Corn closed lower in an overall “disinterested” trade, as most participants hold out for typical pre-harvest bottom. The funds were net sellers of another 8,000 corn today, as they build back up a short position lost amid summer weather volatility.  Another shot of Midwest rain started the ag markets on their initial defensive trajectory. Beneficial rain fell on the driest parts of western and southern Iowa during the weekend, but outside of a few pockets, most of the rain in SC & SE Iowa was too light to make a lasting impact. The markets (soy in particular) will be watching follow-up rains Tuesday into Wednesday, which could deliver half inch totals to eastern Iowa, northern Illinois, and southern Wisconsin.  Thereafter, a dryer pattern is expected to evolve over the next two weeks. Either way, with pollination in the rear-view mirror, the scope to improve (or further harm) corn yields are quite limited.

Several national crop tours kick off today.  Such tours tend to under-state yield and have a poor correlation to the final USDA number, but will no doubt influence the market with tweets and bleats.  Initial Ohio yields from the Pro Farmer tour suggested yields north of 170 bpa, which compares to last year’s estimate just below 160.  Western scouts in South Dakota offered much more variable results, ranging from 186 bpa to 123 bpa. Crop Progress report after the close played out close to expectations, finding corn conditions holding steady wk/wk.  62% was rated Good-Excellent (vs. 75% last year), while 12% was rated Poor-Very Poor (vs. 7% last year).  The headliner in the stats was no doubt Illinois ratings, which saw an -8% cut in G-E ratings, likely owing to missing out on some of the recent rains. Broad improvement was noted in the Dakotas and Ohio, while most of the rest of the Eastern Belt deteriorated some.  76% of the crop was in the dough stage, while 29% was dented, both slightly behind normal and last year.

The soybean market traded lower on the day. The selling started with a weather influence. Welcomed 1-3 inch rain totals fell over a good stretch of western IA overnight and early today with more in the forecast and should be very beneficial for bean yield potential there. The weather selling was offset somewhat by continued signs of strong demand with the USDA flashing new crop sales of 463 mt to unknown and 198 mt to China and later the weekly inspections data showing another 5 cargoes were shipped to China last week. It was a painfully quiet and low volume trade with Nov futures trading only 78k contracts for its lowest total in two months. Crop conditions this afternoon showed soybean gte rating up 1 to 60% which was about as expected and compared to 72% this time a year ago. The crop is 87% setting pods vs. 79% a week ago. The states that saw the best improvement were where the rains fell with IA +2, KS +3, MI +2, MS +2, ND +3, SD +8 and TN +3 while the states that saw the greatest deterioration were AR -2, IL -3, IN -3, LA -4, and MO -3. The Pro Farmer crop tour began today and they scheduled to release their OH and SD estimates later tonight.  he USDA recently estimate OH corn and bean yields at 171 bpa and 53.0 bpa respectively and SD at 140.0 bpa and 45.0 bpa.  There is some rough weather moving through SD this afternoon so hopefully everybody stays safe out there.

The wheat complex battled both sides of unchanged during the early part of the evening. When the day session began the selling continued, with Mpls falling to double digits lower while Chicago and KC mostly stayed between $.05-$.08 lower. Today’s settle in both the HRW and SRW wheat’s are new contract lows, a theme we heard a few times last week. Both Chicago and Mpls have posted four consecutive lower weekly closes, and KC has posted six consecutive lower weekly closes. The market has plenty of time to recover from today’s poor start to the week, and even though the COT report after the close on Friday showed the large spec (funds) still holding a long position of a little over 40,000 contracts in KC, much of this length could be against Chicago wheat. If that is the case, maybe all we need is Russia to stop its rhetoric on how big their wheat crop is getting so maybe the US markets could get a bounce off very oversold conditions. Last week we mentioned several times that a growing Russian wheat crop and increased export expectations, combined with Black Sea Values continuing to slip lower, have had a very negative impact on Matif wheat. The European contract pushed into new contract lows several times last week, and started this week out picking up where it left off on Friday.

Anna Kaverman

anna@mercerlandmark.com

By~ Jacob Lewis

Answer Plot:

If you are like me and are always wanting to learn new agronomy information there is no better place to be than the Mercer Landmark Answer plot days August 22-24th .  Ask your Mercer Landmark agronomy advisor more about these days. There will be speakers covering topics such as herbicide & fertility plans, high management corn and soybean production, dicamba management and weed control. There will be door prizes and seed discounts for those that attend!

Cover Crops:

It is that time of year to think about cover crops. A few questions to think about are:

What cover crops should I plant?

How will I be able to kill this cover crop in the spring if it is not a crop that is winter killed?

What task do I want my cover crop to perform?  Such as: adding nitrogen, breaking up soil, erosion control, increasing water filtration, 4R stewardship, etc.

These are good questions to ask your Mercer Landmark agronomy advisor before choosing a cover crop or a cover crop mix. For a 1st time cover crop planter, starting off with 1-2 fields is wise vs planting the whole farm operation.

Wheat: It is about that time of year to be thinking about planting wheat. The fly free date for Paulding county is September 24th

Van Wert County September 26th

Mercer County September 27th

We offer many wheat varieties that have performed very strongly in the Ohio State Wheat trials, ask your Mercer Landmark agronomy advisor for one of these varieties.

Soybean Aphids: In the most recent Purdue University Pest & Crop Newsletter releases August 17th, they have confirmed soybean aphids above the 250 aphid per leaf sampled threshold in Northern Indiana. We also have been finding them in Northwest Ohio. It would be a good idea to look for aphids in your soybean fields, and I’m sure a Mercer Landmark agronomy adviser would be happy to help in the process.

Link to article: https://extension.entm.purdue.edu/pestcrop/2017/Issue21/

Market Report

Wednesday August 16th, 2017

September corn closed down 2 ¾ at $3.52 ½ and December 17 corn closed down 2 at $3.66 ½. November beans closed up 1 at $9.25 ¼ and January 18 closed up 1 at $9.33 ½. September wheat closed down 10 ¼ at $4.19 ¼ and July 18 closed down 5 ¼ at $4.96 ½. Crude oil closed down $.76 at $46.94.

Corn traded weaker with another new low close as the shorts continue to pile on. Funds are expanding their short position from near flat before last week’s crop report to an estimate of around 55,000 short after selling 9,000 more today. The market did manage to float back off its lows by a few cents but that is about as positive of a comment that can be made at this point as the bear remains fully in charge. The chart is nearing its downside targets in the December $3.60 to $3.55 range where the contract low and price count objective lie. Today’s ethanol report was bearish to that market as production surged +47,000 bbls to 1.06 mln bbl/day and stocks jumped by +481k to 21.83 mln bbl. Next week we’ll have the pro farmer/farm journal crop scouts out in the fields in force and numbers smaller coops and other tours taking place. While you should see some pictures of ugly looking ears in addition to some good looking crops depending on where you stop and final yield estimates will be weighed carefully in light of the USDA’s 169.5 yield projection.

The soybean market had a two-sided performance and ended the session a penny better on the day in another light volume session. Weather remains positive for crops overall and forecasts call for plenty of warmth and moisture through the end of the month. The market did get something new to chew on however that could help provide some stability perhaps as trade talks heat up with China and the US. Yesterday the Chinese trade delegation was in Omaha and signed another frame contract agreement for future purchases of 3.8 mmt of beans. This follows the July agreement signed in Des Moines for 12.5 mmt for a total 16.3 mmt. Keep in mind these are only agreements for intended future purchases and not actual sales for the books and the market understands this. Last year China imported 33.65 mmt of US beans which is approximately 40% of their total bean imports.

What is important is the actual export trade taking place.  Beans priced in reals are trading into new lows today which suggests the farmer in Brazil is likely holding tight to his remaining bushels for now – in addition to likely reducing hectares this coming planting season. As Chinese crush margins improve renewed buying interest could benefit US exports more as a result. China has always responded to value and firming Brazilian basis has made US competitive. The quality of US beans always carries some weight too. First, there were the 5 cargoes of beans were shipped out of the Gulf to China last week that stood out. Now, there is talk that China bought 25 bean cargoes or more in addition last week with most coming from the US for Sept-Oct, 4 out of Brazil. Be on the lookout for confirmation of this business.

Prices were firm throughout the evening led by Mpls which traded as much as $.22 higher before finishing the night a still healthy $.15 higher. Chicago and KC were not nearly as strong, but still managed to trade as much as $.06 to $.08 higher. But the HRW and SRW wheat markets were not able to hold their gains, with that struggle intensifying during the day. Both markets would post double digit losses at some point during the day, before settling a few cents off their lows. It is hard to figure what got into the bearishness tone of price action today in both Chicago and KC, but a couple influences could have been a continuing growing world wheat crop (India came out and said they will have a record crop of over 98 MMT) and offers out to Egypt this morning some ten dollars off from its previous tender. Looking ahead to tomorrow we have export sales. Last week’s sales rebounded from a dismal week the week prior, coming in at 464 MT. Look for wheat sales tomorrow to range between 300 and 500 MT.

Anna Kaverman

anna@mercerlandmark.com