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Commentary
Analytical firm Strategie Grains Thursday trimmed its estimate for the European Union's 2013-14 soft wheat harvest by 1.1mmt to 131.2mmt due to wet weather in the UK and lower acreage in France. However, this was somewhat offset by slightly increased harvest estimates for Lithuania, the Czech Republic, Romania and Bulgaria, designed to reflect new official estimates for last year. Meanwhile, Strategie Grains raised its estimate of the bloc's 2013-14 corn production by 0.9mmt to 63.7 million tons due to acreage transfers from winter crops in France and the inclusion of official estimates for Hungary and Germany.
The UK is likely be a net importer of wheat for the second consecutive season in 2013-14, as adverse weather conditions outweigh price incentives, the Agriculture and Horticulture Development Board said Wednesday. Heavy and prolonged rainfall last year reversed the country's traditional trade flows as the last time the UK was a net importer of wheat was in the 2001-02 season. The Home Grown Cereals Authority said Monday there had been a further increase in imported wheat use by processors
of flour, starch and ethanol, standing at 27% in December compared with 11% in July and the highest level since 1993-94. It also anticipates that millers' imported usage will continue to increase into January; the most recent data are for December.
Russia is forecast to get frosts and drought, which pose a risk for new season crops, the Federal Hydrometeorology and Environmental Monitoring Service. There is a "very high" probability of frosts returning in the Southern and North-Caucasus federal district in February or March, the head of the service said today. The two districts, Russia's main grain growing and exporting areas, harvested 24.6mmt of grain, or about 35% of the national crop this season, according to state statistics data. The weather is "abnormally warm" in these districts, which has grain crops that have started to germinate in the south, and if frosts return, that may jeopardize the harvest. It's been dry in parts of the Volga federal district and the south-eastern European territory in Russia, making drought possible there this year. About 9.5% of winter crops across the country could be destroyed by frost and dampness this year, compared with the multi-year average of 8-8.5%. "The main question is what will be the actual winter crops' loss. Risks are high," said the managing director of the Moscow-based SovEcon consultancy. "The ministry's target of 95mmt looks more and more unrealistic."
On the demand front, cash corn basis levels continue to strengthen across the US as available corn stockpiles decline and domestic demand increases. Cash merchants are pushing for supplies, as demand from ethanol plants climbs due to improved profit margins following a two-week slide in corn prices. US ethanol plants are coming back on line and searching to lock down supplies and margins into June, AgResource said Wednesday. Stockpiles of corn held at selected grain-elevator terminals across the US declined by 3.2% to 57mb in the week through Feb 12, according to data released by the USDA Tuesday afternoon. The USDA said corn supplies in the Texas high-plains area of the US dropped by 51% to 3.3mb in the same time period. Cash merchants are paying $.35 above March futures in central Illinois and merchants in Hereford, Texas, are paying as much as $.96 above March futures.
US Dollar Daily Chart
Corn
The bearish attitude is well present on the intraday chart below. It is going to take sustained trading above 699-701 to turn the tide. After 10 days lower, a Friday short covering event ahead of a three day weekend could break the pervasiveness. We recommended yesterday with spot corn in the low 690 to accumulate all the cash corn now that you need through August. There is no future or option position that can guarantee you will be able to find cash supplies in the Midwest. ND maybe, the rest of the country will be tight.
March Corn intra-day Chart
Beans
1395-1407 is support for March beans until China comes back from their one week holiday. 1395 represents the January highs that should now be support. A recovery to 1450-55 should be the expected bounce.
March Bean intraday Chart
Wheat
Still no meaningful moisture for the dry wheat plains. 726 represents another Fibonacci support value that could catch the falling knife in price. Chicago wheat is the cheapest wheat in the world .
Chicago Wheat Daily Continuion Chart
Live Cattle and Feeder Cattle
As you well know, we are not always right....we realize that. Even a blind sow finds an ear of corn once in a while, so please don't take this as a "horn-blowing" remark....we have been advising for weeks to get some put option floors in place and hope you lose the money on the option and the cash market holds. The options bring comfort in markets like this. On the bright side, look at the charts below. We have achieved some very important downside target objectives, and so far (knock on wood) they are holding. The valley support is holding on the weekly feeder cattle chart, and the uptrend line on the weekly live cattle chart is providing support. On the April Feeder Cattle chart, C = A at 142.62. We missed that by 45 cents this morning, so maybe that's close enough.
Live Cattle Weekly Chart
Feeder Cattle Weekly Chart
April Daily Feeder Cattle
Gold
Gold has broke down, Monday we said "a rally to 1658-1660 that fails to close back above Tuesday will just bring on more selling". 1622-25 is the breakdown target with 1600 major support plus/minus $5.
April Gold Daily Chart
Crude
You can see the resistance on the diesel continuation chart at 3.26-3.27, and the correction it is causing is very moderate. Massive support if this market has a major setback is 3.10-3.11.
Continuation Diesel Daily Chart
02-11-13
Link (in blue) below to view the latest market prediction interview on KFYR - TV:
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