March 31, 2015

Weekly Market Commentary with Miller Risk Management

News Recap

  • Trade focus has increasingly turned to Tuesday’s upcoming Quarterly Grain Stocks and Initial Planting Intention numbers. Below are the average trade guesses:
Item Actual Average Guess Range Previous
Corn acres 88.7 million 87.0-89.9 89.0 @ Outlook, 90.6 in 2014
Bean acres 85.9 83.0-88.0 83.5 @ Outlook, 83.7 in 2014
Wheat acres-all 55.8 54.9-56.8 55.5 @ Outlook, 56.8 in 2014
                  Winter 40.7 40.4-42.0 42.4 in 2014
                  Spring 13.3 12.5-14.5 13.0 in 2014
C Stocks 7.609 billion 7.459-7.800 7.008 Year ago
S Stocks 1.348 1.273-1.404 .994 Year ago
W Stocks 1.135 1.083-1.200 1.057 Year ago



  • The IGC did reduce projected production of both corn and wheat for the 2015/2016 season by around 10 mmt.  The ending balance sheet for corn was deemed “friendlier” by the trade, as carryout showed noticeable declines.
    • “World corn production will see a “sharp” fall in 2015-16, thanks to a retreat in yields from bumper levels, with the reduced output driving a drop in inventories to a three-year low, the International Grains Council said. The intergovernmental group, in its first estimate for next season’s world corn harvest, forecast output tumbling by 49% to 941m tonnes, “as yields retreat from the high levels of the preceding year”.  The lower output will spur some drop in consumption, “mainly reflecting reduced feeding of corn in areas where huge crops stimulated use in 2014-15,” the council said.  However, the drop in demand will, at 13m tonnes, come short of the fall in production, prompting a drop in inventories by 20m tonnes to 171m tonnes, more than offsetting the build in world stocks this season.””


  • Big mix in this week’s USDA Export sales numbers; Soybeans and soybean meal were well above expectations.  Soybeans were the best in six weeks at 505k mt while wheat set a marketing year low 102.3k mt. While the soybean number is good, we still need to beat even last year’s aggressive shipment pace to stay on target with USDA


  • SovEcon raised their estimate of total Russian grain production to 93.0 mmt compared to 84.0 mmt previously.  Russian Ag Ministry sits at 100 mmt. Reports this week hinted that Russia could lift their export embargo on wheat in July, if inflation remains under control until then.


  • Brazilian consultant AgroConsult raised their soybean production estimate by about 1.5 mmt from last month late in the trade session. Soybean harvest is estimated at around 62% complete in Brazil, second crop corn planting is basically done.  Weather in the coming week is expected to see average to cool temperatures over the entirety of the region, with precip trending to the south.


  • Speaking of U.S. weather, its too early to talk about drought. The market, as over-reactionary as it is, has never killed a crop in March.  However, there is dryness developing in the western plains/nw cornbelt that will be watched closely as we go into planting.  On the flip side, the SE cornbelt is too wet and probably a bit too cold leading to early delays there.
6 month Percent of Normal Precip

6 month Percent of Normal Precip

3 month Percent of Normal Precip

3 month Percent of Normal Precip









The first map shows percent of normal precip over a six month time span going back to September while the second map shows percent of normal going back three months.  As you can see, the trend is towards a drier pattern in the major corn production areas.  The exception is Texas, where rains have been building and are now causing delays in planting.

  • On a related note, the increased rains to the Southern Plains (especially on the eastern portions) have improved condition ratings. Tuesday’s state reports showed Texas HRW up 4%, Ok up 4%, CO up 6%.  Part of the improvement (particularly CO) is due to the crop emerging from dormancy.  Farther north, areas of NE and SD are reporting moderate winterkill, but probably not enough to bother the market at this point


  • EIA Ethanol production reports showed an uptick in production this week but inventories also built by 497k brls largely due to a sizeable drop in gasoline demand. Crude oil inventories continue to build by 8.17 million brls, more than the 5.6 million expected.  Gasoline inventory was about as expected, distillate stocks fell less than expected.


  • S. CPI reading was up .2% for the month of February, and was the first positive reading since October, signaling a possible pick up in inflation.  In the Eurozone, PMI data for the month was better than expected indicating that the euro may be trying to find some sort of temporary bottom.  Late week, readings out of Japan indicated the opposite, with February price data indicating zero change and sparking ideas that at least the Japanese economy could be hitting deflation. They are especially sensitive to this after years of trying to escape deflationary cycles previously.  Market is getting a lot of conflicting signals right now in terms of currency and the volatility there could spill over into commodities.


  • For the week ended March 24, the actively traded commodity funds did an about face after last week’s big selling in corn, and were net buyers of 38k contracts, leaving them net long 1k, or, basically flat. In soybeans they were net buyers of 1k, and now net short 39k, and in wheat reduced their net shorts by 1k, now short a still big 66k. Looks like they are having as tough a time in getting the corn direction right as everybody else is!


  • Crude oil markets saw a mid week rally as Saudi Arabia unleashed air attacks on Yemen rebels and the deposed Yemeni leader fled to Saudi Arabia. The area in question is on the edge of a major crude oil shipping point, creating some logistical concerns.  However, but late week, those seemed to have died down and markets softened.




Corn markets were trapped largely between the 50 and 100 day moving averages this week, with high coming very close to testing the top of the range from early March but unable to maintain that strength for any notable length of time.  As we’ve rallied substantially going into the report, we have to question if the market is already pricing in some sort of acreage reduction and muting any bullish possibilities for next Tuesday

The Blue line is 9day MA, the red is the 50 day and the green in 100.  As of Friday’s close in the Dec 2015 contract, the 9 day stands at $4.09 ¼ , the 50 day at $4.12 1/4 , and the 100 day $4.17

Dec Corn



Soybeans struggled more than corn this week but in general remained in a consolidative range ahead of next Tuesday.

Nov Soybeans


On the chart above, you can see the fact that soybeans simply did not have as much optimism this week.  Here, the 50 day moving average served as resistance rather than support and we never even really put that to a big test this week.  As of Friday’s Close, the 9 day moving average in Nov soybeans was $9.53 ¾ , the 50 day was $9.66 1/2 , and the 100 day stood well above the close at $9.89 ¼ .



The wheat markets were a bit more interesting that corn or soybeans this week as they shot higher on Monday only to fall decisively on Thursday as they broke nearly every available support level.  It should be noted that open interest increased on this decline indicating that it was fueled by new short positions entering just after a high.

MW Sept

Please note that Monday’s run high broke the previous high but simply couldn’t break through the 100 day moving average ($6.09 on Friday).  In fact, the market gapped lower on Tuesday and set up minor resistance at the bottom of the gap right at the $6.00 mark.

Miller Risk Management is a subsidiary of Clayton Pope Commodities, LLC of Champaign, IL.  Please Call Katie Miller at 701-730-3352 with any questions.  

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U.S. Wheat Associates Prioritizes Trade Issues for 2015

The latest issue of the U.S. Wheat Associates newsletter published a list of the organizations trade priorities in the coming year.  The USW and the National Association of Wheat Growers (NAWG) represent U.S. wheat farmers and have been adamant in their support the free and fair flow of global wheat trade. According to the groups, “Domestic policy, export market development and trade policy dramatically affect the bottom line of U.S. farmers and their downstream customers. By supporting policies that improve market access, eliminate unfair trade practices and enforce existing trade commitments, U.S. farmers can continue to be the world’s most reliable choice for high quality wheat and help meet the food needs of a hungry and growing world population.” 

Each year, the two national wheat organizations publish trade policy priorities. Here are some highlights for 2015:

  • We encourage full funding of the Market Access Program (MAP) and Foreign Market Development (FMD) program that support critical market building and development programs for U.S. wheat producers and U.S. agriculture.
  • We encourage renewal of Trade Promotion Authority (TPA) as an essential tool for negotiating market-opening free trade agreements.
  • We support a comprehensive and forward-looking Trans-Pacific Partnership (TPP) agreement and encourage efforts to include more countries. We also support a comprehensive Transatlantic Trade and Investment Partnership (TTIP) and encourage pursuing new free trade agreements.
  • We support the World Trade Organization (WTO) and the global rules-based trading system. We believe that a successful negotiation by the 160 WTO members provides the best opportunity to generate new U.S. wheat sales. The WTO remains an important institution and we support efforts to re-energize trade negotiations.
  • We support greater transparency and stronger monitoring and enforcement of trade partner compliance with their trade policy obligations, including domestic support, market access and export competition commitments.
  • We support ending the U.S. trade embargo and normalizing trade relations with Cuba. We also support the current exemptions for agricultural sales to sanctioned countries for humanitarian purposes.
  • We support the development of harmonized global approvals and science-based standards for the import of biotech crops, including the development and application of predictable low-level presence (LLP) policies for biotech crops approved in accordance with Codex Alimentarius guidelines.
  • We are concerned by the increase in non-tariff barriers and encourage more robust sanitary-phytosanitary (SPS) measures that would be fully enforceable, create greater transparency and a rapid response mechanism.
  • We believe there is a role for both in-kind and cash donations in future food aid programs and encourage the continuation of monetization as an efficient and beneficial means of contributing to food security and to local capacity building.

The complete 2015 summary is available at



FSA Extends Farm Bill Enrollment Deadline to April 7th

Agriculture Secretary Tom Vilsack today provided farm owners and producers one additional week, until April 7, 2015, to choose between Agriculture Risk Coverage (ARC) and Price Loss Coverage (PLC), the safety-net programs established by the 2014 Farm Bill. The final day to update yield history or reallocate base acres also will be April 7, 2015.

“This is an important decision for producers because these programs help farmers and ranchers protect their operations from unexpected changes in the marketplace,” said Vilsack. “Nearly 98 percent of owners have already updated yield and base acres, and 90 percent of producers have enrolled in ARC or PLC. These numbers are strong, and continue to rise. This additional week will give producers a little more time to have those final conversations, review their data, visit their local Farm Service Agency offices, and make their decisions,” said Vilsack.

If no changes are made to yield history or base acres by the deadline, the farm’s current yield and base acres will be used. If a program choice of ARC or PLC is not made, there will be no 2014 crop year payments for the farm and the farm will default to PLC coverage for the 2015 through 2018 crop years. Producers who have an appointment at their local FSA offices scheduled by April 7 will be able to make an election between ARC and PLC, even if their actual appointment is after April 7.

Producers need to contact the Farm Service Agency by April 7. To learn more, farmers can contact their local Farm Service Agency county office. To find local offices, visit