June 30, 2008
July KC: 883 down 42
Sep: 896 1/4 down 48 3/4
The report was basically neutral for wheat, which is just as well, since wheat was just going to be following corn today anyway. All wheat acres were pegged at 63.457 million acres, which was 328,000 less than the trade guess and a little friendly. That was offset by quarterly stocks of 306 million bushels, which was 31 million more than the trade was looking for. Neither of these numbers were anything special, so they were completely overshadowed by the corn numbers, which were bearish.
No change in strategy. Today's action helps me feel better about boosting cash sales to 50% a few days ago, but I still think the low is already behind us. I could see wheat dropping another 50 cents or so if corn continues to liquidate, but I think we'll see support on a break like that.
From Freese-Notis Weather's morning commentary:
"Weather looks favorable for harvesting in the Plains for the most part over the next ten days, and soft-red areas will get a lot done the next three days before unwelcome rain moves in. Spring wheat ratings probably will be up again this afternoon."
From John Dee's morning forecast:
"The HRWW belt will see dry weather occur through Wednesday. A front then looks to work through on Thursday and Friday and bring some rainfall chances to the region. The front looks to be somewhat starved for moisture and the HRWW belt also looks to be catching the tail end of it, so amounts in most cases look to be around .20-.60", with a few isolated heavier amounts and coverage of around 65%. The rains also look to favor the east more than the west.
Mainly dry weather then looks to return for the weekend and early part of next week. I will not completely rule out the chance for a few scattered showers and storms to pop up from time to time over the weekend and early next week, but there does not look to be any mechanism that would produce any organized rains. Daily amounts from any of the activity over the weekend and first half of next week will be generally less than .50" and daily coverage will be around 15%.
Temps for much of this week will be running average to below average, with highs in the 80's and some 90's."
The national average basis was 4 cents better at 52 under July.
Export inspections of 15.0 million bushels were at the low end of expectations. Cumulative inspections are running 3.9% ahead of year-ago levels. The USDA is projecting exports will decline 21% this marketing year.
Egypt issued a snap tender after the close. We'll know the results in the morning. Most or all will probably be sourced from former Soviet Union countries.
The spring wheat conditions ratings improved, with 74% rated good to excellent compared to 72% last week.
Winter wheat is 36% harvested, compared to 22% last week and a 48% average. Kansas is 36% cut, compared to 6% last week and an average of 69%.
All Kansas wheat embargoes have been lifted.
That's it for now!
Jeff
The information contained in this letter, while not guaranteed as to accuracy or completeness, has been derived from sources believed to be reliable and arrived at by careful consideration. Losses as well as profits are possible, and market conditions can change rapidly. Any trade recommendations included in this letter are the opinion of the author, therefore the use of this information and advice is the sole responsibility of the user.
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