August 26, 2011
By: Craig Haugaard, Grain Origination Manager
CORN: 1 lower
The July 2011 corn futures had a life of contract high at $7.99 ¾. We achieved that price as we were looking at an estimated carry-out of 675. Now, as we sit here this morning we have the Pro Farmer crop tour estimating that the corn yield in Illinois will be down 6% from last year. Last year Illinois had a state average yield of 157 bu/acre. At the present time the USDA is projecting that Illinois will have a state wide average this year of 170 bu/acre. This comes on the heels of other reports trickling out of the Pro Farmer tour which indicate that other states may very well be less productive than what the last USDA report would indicate. We will get the full summary of the Pro Farmer tour today but one would have to expect that we will see a projected national average yield well under the 153 that the USDA tossed out in their last report. When we last ran the numbers, a 149 bu/acre national average yield projected a carry-out of 356 million bushels. This brings me back to my first line this morning to ask the question, "If a projected 675 carry-out took the July 2011 futures to $7.99 ¾ how high would a projected 356 carry-out potentially take the July 2012 corn futures?” I suspect that this is a question we will spend the next few months answering. For now, my indicators are bullish and so am I.
SOYBEANS: 3 lower
The Pro Farmer tour is reporting that pod counts in eastern Iowa are down from last year; in Illinois they are finding the pod counts down 8.6% from last year while in Minnesota the pod counts are actually higher than a year ago. As is the case with corn, we will get their final numbers at some point today. The crush numbers continue to look good and in fact we may end up with a little better annual crush than what the USDA is projecting. Couple this up with the recent report that South American farmers are going to plant more corn and less bean acres this coming year and assume that based on the corn/bean economics that farmers in the USA will do the same next spring and you create a compelling long term bullish story for the bean market. My technical indicators are bullish at the present time.
WHEAT: 4 lower
The only international news that I have seen this morning is a report that indicates that Ukraine could export more wheat than what has been expected. Yesterday the IGC had a projection that wheat production worldwide will be up 3 MMT this year. Other than that the story remains unchanged and long term the biggest domestic story in the wheat market continues to be the drought as fears that this could be a multi year drought continue to grow. As we get closer to planting time for HRW the drought and the potential impact on limiting planted acres this year looms larger and larger.
The information contained above was taken from sources which Wheat Growers believe to be reliable, but is not guaranteed by Wheat Growers as to accuracy or completeness and is made available for information purposes only. There is a risk of loss when trading commodity futures and options.