May 25, 2015

Wake Up Call

Weather, Holiday Trade In Focus

Good Morning! It’s Friday May 22nd at 5:30 AM.

Grain markets are higher as traders adjust for the three-day holiday weekend. Wheat remains the leader supported by moisture and quality concerns. Outside markets await today’s inflation numbers.

Morning Coffee Commentary:

Talks of rust in the Hard Red Wheat, and vomitoxin in the Soft Red continue to swirl in the wheat trade. Yesterday, Ryan Martin wrote of the HRW area, “While we don’t see large coverage heavy rains as much starting next week, areas that need to dry off in a big way may run into some headwinds from the hit and miss moisture that will be around. For the week to 10 day period starting next week…we likely will see 90% coverage in the plains of at least some moisture.” Look for an update this morning on our weather blog.

While the US wheat growing areas are seeing too much rain, parts of Russian and Canadian wheat growing areas are suffering the opposite fate and not seeing enough.

The weather-related volatility has led CME Group to raise the initial margin for Wheat from $1,430 to $1,650 per contract for speculators, and $1,300 to $1,500 for hedgers beginning with the close of business today.

Weekly export sales out yesterday had old crop corn at 812,594 metric tonnes, soybeans at 165,463 tonnes, and wheat at 74,380 tonnes. New crop numbers were 80,732 tonnes for corn, 77,500 tonnes for soybeans, and 128,163 for wheat.

Old crop soybeans were the highlight of the sales report as we are nearing USDA’s whole year goal (which ends August 31st). Last year’s pace for these same remaining months suggests we will surpass USDA’s goal, especially as this years US soybean pricing vs. South America is far more favorable vs. last year.

If you missed it, yesterday NOAA released its updated June through August forecast. They see normal to below normal temperatures and normal to above normal precipitation. Our yield studies suggest this could lead to higher than trend yields.

NOAA’s shorter-term June forecast has normal temps in the Midwest and normal to above normal precip. Bottom line, they are showing no weather concerns for corn or soybean yields at this time. Watch for changes in long-term forecasts though as they could provide sharp market moves.

For more on what will impact this years corn crop, listen to the recording of Tuesday’s Ag Leaders webinar. We had some great insight from AgriGold Agronomist Mike Kavanaugh. You can get the recording here.

On the economic calendar today at 7:30 CDT, CPI and core CPI data will be released. Trade averages are for increases of .01% and .02% respectively. Janet Yellen is also slated to give a speech in Rhode Island at 12:00 PM CDT. Keep an eye on these issues as they could have a US Dollar impact on commodities as a whole.

Today’s Cattle on Feed and Cold Storage reports will be released at 11:00 AM CDT instead of their usual 2:00 PM CDT, due to Monday’s holiday. Estimates are for Cattle on Feed: 101.7%, Marketed: 92.4%, Placed: 102.5%.

This month’s Cold Storage report is likely to take a backseat to the COF numbers. We see beef stocks ending last month at 472.996 million lbs. This would be 7 million under the previous month which is more of a drawdown than the 1 million decline normally seen that month.

For pork, we see stocks at 681.772 million lbs. This would be a 13 million lb. increase over the previous month, near the normal increase of 11. This stock number would be 17% over last year.

Markets will have a regular close today and are closed Sunday night as well as during Monday’s day session for the Memorial Day holiday. Grains will reopen at 7:00 PM CDT Monday night, while livestock will remain closed until Tuesday morning at 9:05 AM CDT. Crop Progress is also delayed and will be released Tuesday at 3:00 PM CDT instead of Monday.

Have a happy and safe Memorial Day. Thank you to those who gave all.

Markets as of 5:30 AM CDT

  • Jul Corn   +2 1/2
  • Jul Beans +1/2
  • Jul Wheat   +6 1/2
  • Jul Soymeal +1.50
  • Jul Crude   -.33
  • Jun Gold   +.9.80

Technical Chart of the Day

daily chart

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