Tucker Talk: March 13

wheat; sky; blue

Wheat heads looking excellent.

Market News

Grain stocks are large as farmers are still sitting on last year’s stocks and revenues and have little interest in selling at this year’s prices.  The last few years of high prices caused complacency among producers resulting in current prices being below many break evens.  The simple reality is prices are probably not going back to the higher levels they were.  World supply is adequate and the value of the US dollar is high.  Prices are low, input prices are high, and there is still downside risk with current prices.  Farmers will need to be more active in cost management and downside risk protection if they want to make a profit this year.

Superb weather brings us news of fertilizer spreading and talk of planting spring wheat in the Dakotas.  The drought monitor indicates Box Butte county in Nebraska is abnormally dry but wetter than the last two years.

Burlington Northern railroad is indicating substantial improvement in train movement times after they pulled thousands of cars off of the lines.  Farmer’s Coop has shipped two corn trains and two wheat trains since February 17 with two shipping the first week of March.

Corn

Corn continues its sideways movement, waiting for the March 31 plantings report to come out.  Prices are still fundamentally torn between excessive old crop stocks and tightening of 15-16 production estimates.  There could be a major break out of the sideways trend after the March 31 report.  The longer the sideways movement continues, the higher the potential for a major breakout.

The USDA increased corn export and feed usage and decreased ethanol usage in Tuesday’s supply and demand report estimates.  The result was a decrease in ending stock estimates for the 14-15 crop year.  The major talk about the March 31 planting report is whether farmers will shift as many acres from corn to soybeans as predicted.

Wheat

Prices were up this week with short fund covering and perceptions of dry U.S. Plains having negative impacts on wheat production.  Short funds were near record levels after CFTC re-counted last week.  World wheat stocks are good and weather is looking favorable for new crop production.

The US dollar index touched 100 points on Wednesday night, the first time since 2003.  Grain prices are highly influenced by the US dollar.  Wheat exports looked ugly Friday morning with concerns that the rise of the US dollar is starting to impact demand for US grain.  There was a story talking about Egyptian private importers having trouble gathering enough “dollars” for wheat purchases from the U.S. because the Egyptian government has devalued the Egyptian pound and implemented new currency restrictions to combat the black market.  This is an example increasing demand for dollars driving the value of the dollar higher.

Soybeans

Talks between the government and truckers began in Brazil in response to trucker strikes over fuel taxes.  They are expected to continue into late March with no guarantee that concessions will be agreed upon.  A three day Argentina producer grain sales halt started on Wednesday to protest government export quotas.  Producers have indicated that more strikes will occur if demands are not met.

Brazil exported more soybeans in the first week of march than January and February combined.  No changes were made in soybeans in the USDA supply and demand report released on Tuesday.  Larger soybean plantings are expected in the March 31 report with plantings shifting from corn to soybeans which would result in increases in soy stock.

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