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Friday April 24, 2009 Weather Returning wet and cool weather to the
northern U.S. Plains over the coming week to ten days will set back the
region’s recent improving trend. Further delays to spring planting will be
likely. Today’s forecast changed little through mid-week next week.
Rain advertised for the western Corn Belt Thursday and Friday of next
week and the eastern Midwest May 1-3 has been shifted further to the
north impacting a larger part of the northern Plains and upper portions of
the Midwest. This shift reduces rainfall in the immediate Ohio River
Valley, Missouri and the Delta, although some rain still falls in these
areas. The northward shift results in higher pressure in the southern
states and that allows temperatures to be a little warmer than previously
advertised. Weather events advertised for the week of May 3 on the
00z GFS model run were a little weaker than those suggested Thursday
resulting in a little less rain, but their frequency was still great enough to
interfere with fieldwork at times. The 06z GFS model run restored a
more significant rain event for May 4-6 that, again, favors the northern
two-thirds of the Midwest while only light rainfall occurs in southern
areas and in the Delta.
The bottom line today is a little drier and a little warmer in the
southern states during the latter half of next week through the first week
in May. Frequent rain still occurs in the northern and central Plains and
northern two-thirds of the Midwest. The less significant rainfall in the
lower Midwest and slightly warmer temperatures may encourage better
drying conditions (eventually). Hard red winter wheat weather in the
central and southern Plains will remain very good.
Markets tried to gain support from export sales report yesterday (especially good bean sales for new crop 2009/10 and more Chinese news and
questionable weather, however they took a rest and moved somewhat opposite as usual hinting of once again adjustments in positions by traders in
their popular spreads with July beans take the worst brunt of it and corn was actually higher with wheat being explosive especially late day and
especially Spring Wheat as wheat traders seeing the possible problem with acres of spring wheat, and crop deterioration of HRW . Overnight markets
were quiet. July soybeans seems to look tired this week---- as has corn. Wheat the dog of the bunch fundamentally is perhaps now revealing
changing fundamentals that have largely been ignored until now. Next week looks key for planting progress as moisture is slated for a comeback with
temperatures falling back to normal to below as well. A lot of planters have set idle this week in Central IL with farmers relinquishing that it will not be
a late spring planting season. We’ll begin planting in N IL next week after the dry out of Sun-Tue rains?
STATS CANADA: Released their crop planting estimates and contained some surprises (see table above) Spring Wheat was actually up 5.9% a
surprise to most!!!!! Canola was down 7% also a surprise ???? Winter wheat was down 19.6 and was a surprise in the other direction where most
thought -10-15% would suffice---this led to the increase in soybeans (Ontario likely) . Flax (W Canada) was also up 10% ! Corn up 3%.
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Technically, if the definition of an up market, is higher and higher high and higher and higher lows, then today will be important from a
weekly standpoint as soy meal, and corn are lower going into today versus last Friday’s close. Wheat on the other hand could post a weekly reversal
higher---something we haven’t seen in some time. This week caught a lot of traders off guard with little capital to withstand a move higher. Technically
no significant damage yet, however some daily signals suggest a pre-weekend setback would not be unexpected. Soybeans have gained about $40
per acre on corn the past few weeks, however Rich Feltis of MF Global suggests farmers have not backed off on their intentions and in fact may plant
a million more acres of corn and beans--- mmmmmmmmm They are going to get to our estimate yet 
ETHANOL: Calif reportedly votes on their ethanol or lack thereof, initiative today!
Weather: The amounts and area of coverage changes almost daily but the focus is not if it is going to rain, but where, how much, when and for how
WORLD NEWS : India will need to import about 60% more vegetable oil in the next five years if domestic production fails to improve, needing to
raise production and productivity to check imports.
China’s commerce ministry warned about potential risks as China's soybean and rapeseed imports in April approach record levels. The large imports
may cause an oversupply in the country because harvesting is about to begin for the new domestic rapeseed crop, while demand for cheaper palmoil
is expected to pick up as the weather gets warmer.
Australian farmers are likely to have sold more than 85% of the 2008/09 wheat harvest that ended in February, yielding about 21.4 mmt, as a weaker
currency boosted the grain's appeal. At most about 15%, or around 3 mmt remained unpriced, stored on farms, they said.
U.S. crude stockpiles grew for a seventh week last week, by 3.86 million barrels to 370.6 million, an Energy Department
report showed. That’s the highest since September 1990. Total daily fuel demand in the U.S., the world’s largest oil
consumer, averaged 18.5 million barrels a day in the four weeks ended April 17, down 6.5% from a year earlier. Nippon Oil
Corp., Japan’s largest refiner, will cut fuel production by about 6% next month from year-earlier levels as the recession in
Japan weakens petroleum demand. Japan’s debt burden, already the world’s largest, will probably climb to 197% of gross domestic product
next year, according to the Organization for Economic Cooperation and Development. They refused to mark to market their assets remember?
Prudential Financial Inc. rose 2.3% to $26.18. The second-biggest U.S. life insurer was raised to “buy” from “sell” at Goldman Sachs Group Inc.,
which said “the risk of large dilution, rating downgrades and regulatory action could be mitigated” because the government may provide “inexpensive”
capital to the industry.
STRATEGIES & ADVICE -- Note positions monitor below for updates
Yesterday’s Trade: Soybeans – END USERS bot 25% coverage in July meal futures for Q1, 2, 3. Otherwise no new trades formally.
CORN – Sold calls on 25% of remaining unsold/unhedged 2008 inventory--- We seemingly have a variation of ;position depending on the risk
tolerance. Some have short calls with long futures 1 for two, and some in addition sold call this week---hold all ;positions---we will unwravel the
situation after we see the weekend weather outcome and forecast Monday morning as well as progress in corn.
Soybeans –. Back to 75% in May Meal futures in long May futures--- -- If you bought one July bean at 1036 –take profits at 1041 this morning
End Users: Sell one SMN $330 (July) call for each long meal contract shortly after the market opens---If meal is trading $315 or less at 1 pm,
sell an additional SMN call one call for each two futures contract you are long.
Wheat –the HRW crop may have experienced more damage than market believes--- we have NO futures position—we profited from 24-30 cents
on the short calls which had little value left. We are long KC against SRW IF you are short—we are not
LCattle – out of all hedges for now—No new advice
Live Hogs: 50% hedged /Q2/Q3—--no new advice
Equities--- -- no positions---exited any remaining Dow at 7970 for a good profit long one June Dow 7940 yesterday
US or Foreign Currencies---see chart abov e ---sell one June 85.40 or higher—cancel at noon if not filled—and go to market with order
Energies: long one June crude at about $50. Hold for now
Cotton: Use a sell stop 50.00 to exit remaining profitable longs.
Rice: No positions at this time. Producers hedge on break below 12.80.
This copyrighted report is intended for the use of clients of SMS, Inc only and may not be reproduced or electronically transmitted to other companies or individuals,
in whole or in part, without the prior written permission of SMS, Inc, Strategic Marketing Services. The information contained herein has been taken from trade and
statistical services and other sources we believe are reliable. SMS, Inc. does not guarantee that such information is accurate or complete and it should not be relied
upon as such. Opinions expressed reflect judgments at this date and are subject to change without notice. There is risk of loss in trading futures and options and is not
suitable for all investors. Please carefully consider your financial condition prior to investing.
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