Morning Highlights


Highlights

  • The yen firmed up in Asia overnight causing the Nikkei to decline. Data showed that the Japanese economy grew an annualized 3.5% in real terms in the first quarter of 2013 versus a 2.8% expectation. The strong economic data showed that Japan’s stimulus plans are working, making the yen strengthen and lowering the Nikkei.
  • Yesterday China’s commerce ministry cited concerns that weakness in the yen is limiting Chinese imports into Japan.  This statement comes as a stronger yuan weighs heavily on Chinese manufacturers.
  • Overnight the Stoxx Europe 600 Index fell .2%, the U.S. Dollar strengthened against all but one of its 16 major peers, gold dropped 1.2%, and crude oil retreated .8%.
  • Midwest forecasts show the possibility of light rains to interfere with fieldwork today and tomorrow and then moderate to heavy precipitation likely to shut down fieldwork later Saturday into Sunday, Monday, and Tuesday of next week. Quiet weather is expected to return to the Midwest for the second half of next week.

Corn

  • Futures trade for corn was very flat overnight with nearby July futures staying within a range of $6.48 ½ to $6.51 ¾.
  • Ethanol production was reported this week at 252 million gallons versus the prior week at 248 million gallons. This week’s production numbers were solidly above the 245 million gallons per week needed to reach the USDA’s 2012/13 corn for ethanol production estimate of 4.600 billion bushels.
  • Ethanol stocks declined this week to 690 million gallons from 708 million gallons the prior week. Stocks now sit at the lowest levels since December 2010 which is a concern as we head into summer which constitutes a typical rise in gasoline demand.
  • Many traders are already looking toward Sunday night and Monday afternoon to see what the weather models say for next week and see what number the USDA pegs on planting progress.

Outlook: Weather and planting progress continue to be thematic. Mixed trade is expected is the market looks for direction.

Soybeans

  • Soybeans moved in an upward direction overnight as Chinese demand for new crop is once again present.
  • Yesterday China bought 171,000 metric tons of new crop soybeans from exporters. Buyers in China are waiting for new crop to develop due to tight old crop supply and high prices.
  • Palm oil advanced for the first time in four days on speculation that demand for the world’s most consumed vegetable oil may increase ahead of the Muslim fasting month of Ramadan.
  • In Brazil some delays will remain over the next 5 days due to shower activity as logistics at South American ports continue to be an issue for exporters.

Outlook: 4 to 8 cents higher as traders try to interpret future world demand for the soy-complex.

Wheat

  • Wheat futures were generally stronger overnight with Minneapolis, Kansas City, and Chicago wheat all 3 to 5 cents higher.
  • Some showers fell in South Dakota yesterday and then moved into Oklahoma and Texas overnight. Totals were generally less than .20”.
  • In the Plains States temperatures remain above normal with highs in the 80’s and 90’s in the south and 70’s and 80’s in the north.
  • The forecasts call for scattered showers to occur in the winter wheat and northern spring wheat areas of the FSU in the next week to week and a half.
  • Japan bought 147,620 metric tons of milling wheat in five grades for bulk shipment in a tender overnight.
  • Bangladesh bought 50,000 metric tons of optional-origin wheat from India’s Amira Foods Ltd.

Outlook: 3 to 6 higher on better world demand.