friday, july 13, 2012 · when nov futures reached the $15.29 area, and like corn we plan to add...

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Friday, July 13, 2012

(an equal opportunity provider) The information contained herein was obtained from sources believed to be reliable, but can not beguaranteed. All examples given are strictly hypothetical and neither the information, nor any opinion expressed, constitutes a solicitation tomarket commodities or buy or sell futures or options on futures. Commodity marketing and trading is risky. Trading and/or marketingdecisions and any trading and/or marketing gains or losses are the responsibility of the commodity owner, producer, and/or account holder.Minnesota West Ag Services LLC and principals and employees assume no liability for any use of any information contained herein.Reproduction without authorization is forbidden.

Position Management: The table shows how the Sample Farm is positioned at this time. Individual recommendations may vary.2011 Crop 2012 Crop

Corn 90% sold & basis is set.10% sale with Fixed Basis Contracts

40% sold HTA

Soybeans 100% sold with basis & price set. 50% sold HTA

Price Targets: Old Crop Corn 90% Sold. We now have 90% sold and 10% under a basis contract with the final price open. We reached$7.95 in the July Futures and $7.48 in the September Futures, the month on which cash offers are being based. Cash basis near even to +.09or better at processors provided a $7.25 cash offer in the spot market. With the recent key reversal on the charts, there is not a great reasonnot to be sold out at this price level, watch your daily email for a stab at picking a day to sell as no one can out guess this market!Old crop soybeans 100% Sold.New Crop December 2012 40% Sold. Dec Corn made a high on Thursday at $7.13 and is the 3rd highest in history! Only 2 other times in2008 & 2011 and for 4 years has July futures high mark exceeded what is now offered by December Futures. We don’t want to be caught asthe lyrics of a country song are: “I know what I was feeling but what was I thinking” at a later date so we plan to add another 10% sale soon.We have had two opportunities this past week for $7.00 new crop corn sales. If you have received recent rains and are comfortable withyour soil moisture, you may wish to push sales up if you are not already near 40% sold and even consider going to 50% sold or more.

New Crop November 2012 Soybean 50% Sold. When Nov futures reached the $15.29 area, and like corn we plan to add another 10% tonew crop soybean sales or add put options to have 60% sold and price protected very soon. Soybean stocks could tighten even more thancurrent S&D estimates if yield expectations decline further, that thought has us being patient at this time.

Basis: Corn basis ranging from +.02 to -.15 basis September both stronger and weaker depending on location. New crop basis -.37 atprocessors to -.57 at country elevators.

Soybean basis remains fairly steady but is also both stronger and weaker this past week depending on location, ranging from -.20 Aug atprocessors to around -.47 to -.57 under the Aug futures at many elevator locations. New crop basis off about 6 cents at -.43 at processors to-.60 to -.70 at country elevators.

Consider setting basis on new crop HTA that need a fall delivery, most of these HTA’s were placed when basis was much wider than whatis offered today. October Soybean basis seldom gets narrower than -.60 and has widened to as much as -1.30 with elevated prices like wenow have. October corn basis is now near -.45 to -.50 at many country elevators and occasionally will narrow to -.30 or widen to -.65 whenconditions change. With a short crop the basis likely will narrow but if it happens it could be after most of the old crop has worked throughthe marketing channels.

Next Major USDA Reports: Monday Weekly Crop Progress Reports, USDA WASDE Friday Aug 10, 2012

Friday CBOT Futures Closes





CBOT Historical Futures Highs

See Corn & Soybean Charts: Daily Nearby and New Crop Charts are on Page 8 Weekly & Monthly Charts are on Page 16

Market TalkCorn futures charts posted a key reversal on Wednesday after reacting with higher values to USDA’s 20 bushel cut in expected yield, and

then softening on profit taking and closing lower. A key reversal is usually an indicter of change and that the trend is likely to changedirections.

The trade is concerned about the probability of depleting domestic soybean supplies. Right now the United States is theonly country with an exportable reserve of soybeans and soybean values have set record highs trying to slow demand, but sofar, it has not deterred buying. This is from simple demand, but also from currency exchange rates, and how they still allowfor profitable buying even at elevated futures. July Soybeans recently set an all-time high in the futures market at $16.79 ½ ,and there are thoughts corn could as well. The current record high on corn was set on June 10th, 2011, at $7.99 ¾. Corn marketdynamics are different this year though, mainly from an inventory point of view. Corn carryout in June 2011 was estimated at695 million bu compared to today’s 903 million bu.

Much of the U.S. corn crop is pollinating under severe stress, and current forecasts are calling for above normal temps withbelow normal precipitation the next 10 days. December corn futures have rallied 45% in the past four weeks on droughtconcerns. There is talk about a Wilmington, NC firm that is believed to be importing 1 million tonnes of Brazilian corn intothe US. While it does make economic sense, the loading lineup for cargos out of Brazilian ports is long.

Talk is again circulating that the U.S.D.A. and E.P.A. would be altering the ethanol usage mandate. Instead, Secretary of AgVilsack said there would be measures taken to off-set losses caused from this year’s drought, mainly for livestock production.Vilsack did say no changes would be made to the ethanol mandate at this time, which indicates it was discussed. It isquestionable as to whether the mandate even needs to be changed as plants are slowing production on their own due to poorprofitability. Also, U.S.D.A. and E.P.A. have been holding regular meetings and it is thought that the Ethanol mandate hasbeen one of the regular topics.

Funds reportedly bought an estimated 25,000 contracts (125 million bu.) of corn on Monday to continue the recent surge ofspeculative money into the long side of the market. Since July 2 (the first trading session of the month), funds have bought74,000 contracts (370 million bu.) of corn. That's a lot of fund money flowing into long positions in a very short period oftime, helping fuel the strong price rally.

Weather services are talking about a potential El Nino event for Australia later this year which is in a neutral stage at themoment.

WASDE Report Wednesday:For more details on the JULY WASDE see the MNWestAg WASDE Report Recap Newsletter

U.S.D.A. shocked trade in Wednesday’s July supply and demand report by reducing the U.S. corn yield by a huge 20 bu.per acre to an average 146 bushels from recent weather conditions in the Corn Belt. This year’s crop is now expected toproduce a 12.97 billion bu crop, down from the 14.8 billion bu that was forecast in June, but up from last year’s 12.35 billionbu. Corn use was reduced by 650 million bu for feed, 100 million bu on ethanol, and 300 million bu on exports. Corn carryoutis now forecast at 903 million bu on old crop and 1.18 billion bu on the new crop.

USDA estimates the 2012/13 U.S. soybean carryout at 130 million bushels, down 10 from last month and 40 millionbushels from 2011/12. This has the stocks-to-use ratio at a historically low 4.2 percent. Harvested area is projected at 75.3million acres based on a 98.99% harvested-to-planted ratio and planted area of 76.08 million acres up, which is up by 2.2million acres from earlier estimates. Soybean yields are projected at 40.5 bushels per acre, down by 3.4 b.p.a from the earlierestimate of 43.9 bushels per acre. U.S. soybean crush for 2012/13 is projected down slight at 1.610 billion bushels whileexports are projected at 1.370 billion bushels, down 115 million from last month. A decrease in yield below 40.0 bushels peracre would cause a need for additional reduction in usage as we await the South American crop to mature.





Corn & Soybean Crop Progress Weekly U.S. Progress and Condition Data provided by USDA/NASS

Corn: One-quarter of this year’s corn crop began silking during the week, leaving progress—at 50 percent complete—39 percentagepoints ahead of last year and 31 points ahead of the 5-year average. Double digit progress was evident in 14 of the 18 major estimatingstates, as above-average temperatures continued to promote rapid crop development. Overall, 40 percent of the corn crop was reported ingood to excellent condition, down 8 percentage points from last week and 29 points below the same time last year. In Iowa, conditionratings declined 16 points from last week, as temperatures statewide averaged more than 10°F above normal and rainfall totaled less than0.10 inch.

Soybeans: Nationally, 44 percent of the soybean crop was at or beyond the blooming stage, 27 percentage points ahead of last yearand 19 points ahead of the 5-year average. Blooming was rapid throughout much of the major soybean-producing region during theweek, with progress of 10 percentage points or more evident in all of the 18 major estimating states except North Carolina. Overall,40 percent of the soybean crop was reported in good to excellent condition, down 5 percentage points from last week and 26 pointsbelow the same time last year. Record-setting heat and extreme dryness centered over the Midwest led to further crop deteriorationduring the week. Poor emergence was reported in many double cropped soybean stands in Indiana, as dry soils limited germination.





U.S. Corn Condition





U.S. Soybean Condition





U.S. Wheat Crop ConditionWinter Wheat Spring Wheat

September 12 Corn Daily December 12 Corn Daily

August 12 Soybean Daily November 12 Soybean Daily

Seasonal Price Charts:





US Corn Exports 2011-12 Net sales of 172,700 MT for the 2011/2012 marketing year were up significantly from the previous weekand 45 percent from the prior 4-week average. Increases for Japan (280,100 MT, including 137,100 MT switched from unknowndestinations and decreases of 6,300 MT), Venezuela (37,000 MT), Cuba (24,000 MT, including 25,000 MT switched from unknowndestinations and decreases of 1,000 MT), Mexico (20,000 MT), and Canada (5,500 MT), were partially offset by decreases for unknowndestinations (111,300 MT) and Taiwan (87,000 MT). Net sales of 492,100 MT for delivery in the 2012/2013 marketing year were primarilyfor Mexico (252,400 MT), South Korea (66,000 MT), Costa Rica (51,000 MT), and unknown destinations (50,800 MT). Decreases werereported for Jamaica (8,900 MT). Exports of 605,300 MT were down 6 percent from the previous week and 1 percent from the prior 4-weekaverage. The primary destinations were Japan (288,600 MT), Mexico (136,500 MT), South Korea (130,100 MT), Cuba (24,000 MT), China

(7,500 MT), and Taiwan (7,100 MT).Weekly Accumulated

US Soybean Exports 2011-12 Net sales of 332,100 MT for the 2011/2012 marketing year were up 11 percent from the previous weekand 5 percent from the prior 4-week average. Increases were primarily for China (305,100 MT, including 115,000 MT switched fromunknown destinations and decreases of 5,000 MT), Turkey (67,300 MT, including 66,500 MT switched from unknown destinations),Indonesia (30,200 MT), Costa Rica (28,000 MT), Japan (27,900 MT), and Mexico (10,600 MT). Decreases were reported for unknowndestinations (161,500 MT). Net sales of 427,100 MT for delivery in the 2012/2013 marketing year were primarily for China (231,500 MT),unknown destinations (119,000 MT), and the Netherlands (60,000 MT). Exports of 433,200 MT were primarily to China (290,100 MT),Turkey (67,300 MT), Mexico (34,400 MT), Indonesia (13,700 MT), Taiwan (8,200 MT), and Vietnam (6,800 MT).

Weekly Accumulated

US Wheat Exports 2011-12 Net sales of 311,800 MT for the 2012/2013 marketing year were primarily for the Philippines (112,500 MT,including 36,500 MT switched from Taiwan), Algeria (52,500 MT, including 50,000 MT switched from unknown destinations), Jordan(47,600 MT, including 50,000 MT switched from unknown destinations and decreases of 2,400 MT), Japan (39,000 MT), South Korea(27,700 MT), Mexico (25,500 MT), and Nigeria (24,600 MT, including 6,800 MT switched from unknown destinations). Decreases werereported for unknown destinations (76,500 MT). Exports of 411,000 MT were down 31 percent from the previous week and 30 percentfrom the prior 4-week average. The primary destinations were Iraq (52,500 MT), Algeria (52,500 MT), Japan (48,600 MT), Jordan (47,600MT), Indonesia (47,500 MT), and the Philippines (37,000 MT).

Weekly Accumulated





Bi-Weekly Corn Seasonal Price Charts:

Bi-Weekly Soybean Seasonal Price Charts:





Outside Markets:

Midwest Weather:Dry weather continued to dominated much of the region Thursday, with some showers and thunderstorms occurring across MN and thenorthern 1/2 of IA. Totals as of Thursday midnight were generally under .10" in most cases and many stations that I checked by 4 am centraltime had reported another .10" or less, with Cedar Rapids IA reporting .45" since midnight. Temps were average to above average, withhighs in the 80’s and low 90’s in most cases- warmest to the south of I-80.The forecast still calls for some rains to impact the SE section of the Midwest this weekend. Totals could be in the .30-.80" range, isolatedto 1", but look to be confined to areas SE of a line from St Louis to Cleveland, rather than STL-DET. In the north, some hit and miss rainswill impact MN, IA, WI and into portions of northern IL. Most totals with this activity likely will be under .35", with coverage of around65%. The rest of the region looks to be fairly quiet through the weekend and early part of next week. A weak cold front then looks to workthrough by the middle of next week and bring rains of around .20-.60", with some isolated heavier totals and coverage of around 65%. Thatis a slight decrease from prior ideas. Temps should be in the 80’s and low 90’s in much of the region for the weekend and first half of nextweek, with some upper 90’s and perhaps even a few low 100’s popping up ahead of the front in areas like MN, IA, MO, IL and southern WIby Monday and Tuesday. Some cooling back into the 80’s in the north and east and low 90’s in the south and west. is seen for most areas bythe second half of next week.US Plains Weather:A few showers and thunderstorms finished up across the eastern Dakotas Thursday, with amounts generally under .25" in most cases, butisolated to .60". Dry weather dominated the rest of the Plains Thursday. Temps were in the 90’s and 100’s in the south, with 80’s and mainlylow 90’s in the north.The forecast calls for things to be quiet in most of the Plains for Friday and the weekend. Some hit and miss rains will be possible in thenorth off and on next week, with totals for next week as a whole of around .30-.60" most common. Temps will be warming to levels evenmore above average in most of the Plains for most of the next week to ten days, with 90’s and 100’s common in the south and 90’s commonin the north. Some 100’s are possible in the north, especially in the Dakotas Sunday.





The U.S. Drought Monitor indicates a moderate to severe drought in 7 of the corn states with others abnormally to moderately dry.

Bloomington IL Indianapolis IN

Des Moines IA Redwood Falls MN





Corn: Friday’s Close: Jul 12 Corn closed at $7.55 ¾ , down 15 ½ cents, Sep 12 Corn closed at $7.40 ½ , up 9 ¼ cents, Dec 12 Cornclosed at $7.40 ¼ , up 8 cents Mar 13 Corn closed at $7.41 ¾ , up 8 centsCorn futures were mostly higher on the close with the exception of the expiring July contract. July futures were up 13 cents for the weekhowever. The new spot contract September finished within 15 cents of the July contract. Narrowing the spread between July and Septembercorn will minimize the impact on the weekly continuation chart. Rain probabilities for western Iowa Saturday are now at 50 to 70% with an80% chance for western Iowa. The system moves east Sunday bringing an 80% chance to north Illinois. The Ohio River Valley and southernIndiana also have an 80 to 90% chance for rain. Above normal temperatures will prevail according to long term forecasts. The weekly CFTCreport showed Managed Money added 28,773 contracts to their net long from the previous week. High current corn prices are having asignificant impact on demand. Mexico shifted their 120,000 MT corn tender from optional origin to U.S. origin according to privateexporters reporting to USDA . Higher corn prices are also impacting ethanol plants causing many to take extended downtime.

Soybean Complex: Friday’s Close: Jul 12 Soybeans closed at $16.42, up 16 ¼ cents, Aug 12 Soybeans closed at $15.94 ¾ , up 22 ¼cents, Sep 12 Soybeans closed at $15.69 ½ , up 24 cents, Nov 12 Soybeans closed at $15.52 ½ , up 23 ½ cents, Jul 12 Soybean Meal closedat $488.90, up $10.10, Jul 12 Soybean Oil closed at $53.57, up $0.42Soybeans finished the session higher and were up 22 cents for the week. Managed Money put their bucks in the corn only increasing theirnet long in the soybeans by 710 contracts from the previous week. Discussion of a possible El Nino developing in the U.S. in July August iswaning with odds now more favorable for a September October time frame. This does little to help the Midwest in terms of bringing rains inthe July August time frame and would be unfortunate to say the least if rains came during traditional harvest time. Soybean prices havemoved into a consolidation pattern with buyers and sellers unwilling at this time to commit ahead of the weekend. Private exportersannounced the sale of 7,500 MT of soybeans for 2011/12 delivery and 142,700 MT for 2012/13 delivery to an unknown buyer.

Wheat: Friday’s Close: Jul 12 CBOT Wheat closed at $8.42, up 9 ¼ cents, Jul 12 KCBT Wheat closed at $8.41, up 4 cents, Jul 12 MGEXWheat closed at $9.35 ¼ , up 2 ½ centsWheat futures closed higher on the day and were up 51, 52 and 22 cents on the CBT, KC and MGEX respectively. July futures expiredtoday at noon. The weekly CFTC report showed Managed Money added to their net wheat long from the previous week. India is looking toexport 240,000 MT of wheat with the storage situation inadequate. Canada is expected to harvest the most wheat in the past three years thisyear. U.S. Winter Wheat was 75% harvested as of last Sunday. Rain has interrupted some of the more northern winter wheat harvestactivities. Weather services are talking about a potential El Nino event for Australia and the US in September October but is in a neutralstage at the moment. Fertilizer costs are pegged to grain prices according to some of our sources meaning it may be more favorable toproduce wheat in 2012/13.

Cattle: Friday’s Close:Cattle futures finished mixed on the day and were down $2.00 for the week. Feeder cattle were nearly limit lower again today and weredown $7.53 for the week. The weekly CFTC report showed Managed Money had decreased their net cattle long by 1,993 contracts from theprevious week. Cash cattle trade was considered mostly inactive in all feeding regions. Sales were light in Texas and moderate in Kansasyesterday. Sales were $2 to $3 lower at $114 to $115. Sales in Nebraska were also light to moderate at $2 lower compared to last week at$115 in the live on Thursday. Dressed sales in Nebraska were also lower than last week with most sales at $183. Wholesale beef prices werelower again. Choice was down $2.09 and Select was down $0.85. The monthly export total for May was down 11.6% from the previous yearat 207.65 million pounds. Week to date slaughter is estimated at 627,000 head vs. 644,000 head a year ago. Aug 12 Cattle closed at$117.200, up $0.175, Oct 12 Cattle closed at $121.450, down $0.200, Dec 12 Cattle closed at $124.900, down $0.075, Aug 12 Feeder Cattleclosed at $139.000, down $2.225 Sep 12 Feeder Cattle closed at $142.150, down $1.975 Oct 12 Feeder Cattle closed at $144.300, down$2.475

Hogs: Friday’s Close: Jul 12 Hogs closed at $97.225, down $0.075, Aug 12 Hogs closed at $90.400, down $1.875 Oct 12 Hogs closed at$79.475, down $1.875Lean Hog futures closed sharply lower on all but the July contract widening the spread between July and August to around $7.00. Hogs wereup $1.00 for the week. July Lean Hogs expire Monday. Pork trading was slow to moderate with light to moderate demand and offerings. TheCarcass cutout has been on a steady downhill slide since the end of June. Estimated week to date slaughter is 1.957 million head vs. 2.007million last year. The Lean Hog Index moved 0.59 lower as of July 11th to 99.25. Cash hogs were $4.32 lower in IA/M, $4.10 lower in theWCB and $2.28 lower in the ECB. The Economic Research Service reported May 2012 pork exports were 448.2 million pounds comparedto 408.7 million pounds in May 2011.

Cotton: Friday’s Close: Oct 12 Cotton closed at 71.76, up 240 points, Dec 12 Cotton closed at 72.66, up 273 points Mar 13 Cotton closedat 72.66, up 273 pointsCotton futures closed higher on the day and were up 98 points for the week. The lower U.S. dollar was a benefit to cotton prices today.China economic news out this morning showed GDP up 7.6% from a year ago giving a boost to cotton prices. China is the largest importerof Upland cotton at 5.2 million RB as of July 5th. The weekly CFTC report showed Managed Money had increased their not cotton shortposition by over 2,000 contracts. The India monsoon rain for the week ending July 11th was up 1% over the long term average when lastweek rains were 49% below the average. Could be the rains are just later this year.





US Dollar Index CRB CCI Index

Crude Oil Daily Gold Weekly

Natural Gas S&P 500 Index





Lean Hogs Daily Lean Hogs Weekly

Live Cattle Daily Live Cattle Weekly

Feeder Cattle Daily Feeder Cattle Weekly





Soybean Meal Daily Soybean Meal Weekly

Corn Weekly Chart Corn Monthly Chart

Soybean Weekly Chart Soybean Monthly Chart





Dec 12 Mpls Spring Wheat Daily Chart Mpls Spring Wheat Weekly Chart

CBOT Wheat Daily Chart CBOT Wheat Weekly Chart

KCBT Red Wheat Daily Chart KCBT Red Wheat Weekly Chart

friday, july 13, 2012 · when nov futures reached the $15.29 area, and like corn we plan to add...

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