Grain Market Commentary, Dan Steiner.

Tanner Sheahan
CPS Tangent

Here's some good weekend reading for you. A few weeks ago Dan Steiner from PGG posted a commentary on the grain markets giving us a broader outlook on the grain markets. Being that we don't operate in a major wheat producing region, we usually have to try a little harder to get plugged in to what the markets are doing. This is great timing with our local harvest just right around the corner. So a big thanks, again, to Dan for sending us another write-up!

Dan Steiner
Pendleton Grain Growers
US: Spring has given way to early summer though this week it feels like SPRING IS FINALLY HERE! Wet, drizzly, windy, cool temps seem more like what we SHOULD have had in April/ May…Now that it is harvest time, the Southern Plains are finally getting rain (about 3-6” so far this month already). Timing is TERRIBLE with harvest trying to move along. Yields are predictably low with LOTS of 5 bpa reports coming in. Those growers with 30 bpa are the outliers this year. Corn has, for the most part gotten planted. With the size of today’s drills and GPS it is possible for US farmers to plant up to 25% of the corn crop in 7-10 days! Weather has been nearly ideal until the last week or so. Now we are hearing of TOO much rain/ cool weather and the market is finally starting to get a little concerned. More on this in the marketing section.
WORLD: One reason for the sharp drop since the last report is the world growing conditions. We simply have NO place in the world that is experiencing any sort of large production concern. The weather has, for the most part, been very good! EU will boost production, Eastern Europe is up, Ukraine and Russia are leaning toward record cereal production and even China is thinking they are on the way to record production. Aussie has trimmed their production estimates a little for the upcoming harvest although the guesstimate is pretty meaningless since it is mid winter there today, and there is simply too much time before their crop will be known 
Marketing: Markets are off hard since we last talked. The fact that the specs have sold 600 myn bu of corn and 200 myn bu of Chicago in the last 6 weeks (now creating an oversold position) is the main reason. Since the last writing we have seen SWW values drop .79/ bu for harvest delivery. HRW is down .96/ bu and DNS is down .79/ bu. Granted when we left off last time we were stressing that the severely OVERBOUGHT condition of the futures and opportunity to make some sales…today we are on the other end of the spectrum. SWW production in the State will be down. Washington will also be down. SWW values will remain strong vs. futures unless for some odd reason (what I like to refer to as a ‘Black Swan’ event) start to rally exceedingly hard (back toward levels we saw in April/ May). Better marketing days are ahead! 
Odds-n-Ends:  As we mentioned earlier, corn for the most part got planted. Next big report comes out of the USDA on the 30th. Actual planted acres will be somewhat interesting. We saw that perhaps 95% of the corn was planted (according to USDA). That implies about 4.5 myn acres weren’t planted as of June 1. June 1 was the ‘witching hour’ when prevent plant kicked in, in North Dakota, Minnesota, Michigan and Wisconsin. Which means about 2 myn acres either did NOT get planted or planted after prevent date (not too likely) implies a change in production for ’14 of about 300 myn bu!

***Rules for Commodity traders: # 14 When the plate of cookies comes around, take a couple……#25..Bulls make money, Bears make money…pigs go broke!