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Friday's report a breath holder

The much anticipated stocks/plantings report will be released Friday morning; many will be holding their breath on this one. Stocks are expected to show extremely tight supplies for corn and soybeans, and will be the final number for wheat 2012/13 ending stocks. Corn stocks have been all over the map for the last several quarterly reports, and this one will probably be no different.

 

Average estimates for corn acres seem to be coming in around 95.3 million, about 2 million less than USDA’s last estimate. For soybeans, the average guess is about 78.0 million, roughly 1 million higher than USDA’s last estimate. Spring wheat acres are estimated about 900,000 less at 11.8 million. The figures do not include flooded acres that will be lost, hurt, or replanted.

These estimates will remain a moving target due to the very late plantings and also because producers were still trying to plant when the survey was taken.

India looks like it will offer another 2 MMT of wheat for export, taking the total to 6.5 MMT for this year. However, their floor price remains well above current world price, effectively taking them out of the market at least for now, and they haven’t hinted that they’re ready to lower that price.

Normally, as we get into mid-June and the combines are moving into central Kansas, the harvest lows are established. This week could well turn out to be those harvest lows. In addition, with the strong move higher on Wednesday holding most of the gains through the end of the week, the technical picture looks more positive as well, with chart formations showing a double bottom with the April lows for Kansas City wheat, and a triple bottom for Chicago wheat. 

While upside may be limited near-term with the ongoing harvest and lack of stressful weather for corn, it’s looking more likely that long-term lows have been established for winter wheat, and very likely for spring wheat as well.

Meanwhile, wheat markets came into last week hovering near the spring lows, pressured by the quickly advancing harvest but also finding very good support from export and feed demand.

Mid-week, China confirmed a purchase of French wheat, with talk they’d also bought Australian wheat and were shopping U.S. and Canadian sources. Stories also began again about their tight supplies and a poor-quality new crop being harvested. These are similar stories that seem to pop up about every other week for the last several months.

 

At some point, we might just find some fire along with this smoke, but for now we just guess at what their real needs are since getting accurate information out of China is all but impossible. It is worth remembering that their last two growing seasons had severe droughts through their prime wheat growing areas - but they always seemed to cut a record crop. Granted, most of their wheat is irrigated, but last year they were even running short of irrigation water. Time will tell, but if their stocks are as tight as some have suggested, this could become a very big deal. Of course, when it comes to China, everything is a big deal.

Back here at home, the hard red winter harvest is into central Kansas. Yields so far have been about as expected, but protein is higher and that appears to be pressuring the premiums for spring wheat. Soft red harvest has been exceptionally slow this year due to heavy rains and flooding, and quality is expected to decline. 

Harvest has also started in Russia, about 10 days ahead of schedule. Late rains there have been huge in giving their crop a strong finish, and production is projected to be near average. This year, however, the government will be competing with exporters as they replenish domestic reserves, likely reducing their total exports.

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