I had a major computer mal-function Friday that left me unable to send market updates. It’s too early to tell if its fatal. Big report today.

USDA said that 87.3 myn acres ARE planted to corn. NASS re-interviewed 1150 growers from original 1595 and came up with losses (abandonment of 1.75 myn acres). If you use a 145 bpa that translates into a 253 myn bu loss. They do have abandonment up in Iowa, Illinois, Indiana and Missouri compared to normal. So the story from USDA is all the acres did get planted, but due to higher abandonment in the 4 major states they tweaked the production a little lower, but NOT nearly to the extent that the trade had factored in. NET NET is that the market took all of this as extremely bearish. USDA currently projecting 11.44 byn bu crop. Corn was called 5-9 lower, but opened –20 and is currently resting on limit down. Stocks on hand are at the high end of trade guesses of 403 byn bu (about 500 myn more than last year). Wheat futures are also off hard in sympathy with corn.

One other very interesting thing is that USDA says there was no significant reduction in herd size in swine. With corn racing to new highs, trade had figured that there would be greater herd reductions.

Last Thursday the House passed a bill (402-19) that would call on the CFTC to more aggressively police energy markets (nothing about commodity markets). The Senate won’t see the bill until into July (it doesn’t sound as if the Senate would pass it). Speculation is not the same as manipulation. So where is the risk? Well remember for every spec/ fund that is long…there is a corresponding SELL. So SOMEONE (S) are selling the other side. Merely adding to the margin/ maintenance amounts will slow things down, but those impacted most will be small traders/ Co-ops/ grain companies, and many of them are already less involved than they were 18 months ago. An OPEC minister suggested that we may see $170 crude, as we cruised by $143 this morning.

Ukraine expects to export 13.5 to 14 myn mt, and the UK also expects wheat exports to be up. They are projecting 3 myn mt vs. 1 last year. Situation in Argie continues to unravel. 1/3 of the Argie workforce is involved in AG, and AG accounts for ½ of ALL Argie exports…in essence AG pays about 75% of the cost to run the country….

***Didja Know: 92% of all US beans this year will be GMO, and 80% of all Corn?

***All bids are subject to change, please call for CONFIRMATION of prices. All information in this letter is from sources deemed reliable, and is for informational purposes only***

Over night futures were up slightly, this morning they went straight NORTH on pre-positioning ahead of Mondays very important report. Traders are expecting corn stox numbers of about 3.6-4.3 byn bu, and planted acres to be somewhere between 83.5 and 87.5 myn acres. Wheat stox are expected to be about 275 myn bu vs. last years 456 myn bu. Another 9" of rain in parts of the midwest overnight did NOTHING to help the flood/ wet soils. With more levees breaking and 10’s of 1000’s more acres flooding. USDA embargoed about 7500 acres worth of wheat in Kansas, concerned that there could some ‘residual’ chemical (late applied Quilt). Samples showed no trace of chemical and plant tissue showed below tolerance. It is interesting that this gained this much attention.

Sales reports were, well interesting. Corn sales only totaled 15.8 myn bu (but half of it was new crop). Wheat sales tallied 18.2 myn bu. The market is NOT expecting any action by the CFTC till at least July.

Vietnam is reporting a record rice harvest…and so it goes for most of the world reporting very good crop conditions. China is up, India will have one of their largest ever wheat crops (projected at 78 myn mt or more). EU looks GREAT. Black Sea locations look GREAT. Right now wheat values are being drug along by corn and we really aren’t all that competitive in world markets (although 18 myn bu is a nice week). Aussie is OK, but so far from harvest that many things can happen, most of them bad. The Argie strike is having an impact, just not exactly what was intended perhaps. World demand for Argie beans is still strong, but buyers are only willing to buy them at a discount. The on again/ off again nature has logistics in a terrible mess, and costs are high. Being seen as an unreliable supplier is not a favorable position…

***Didja Know: The dogs name was in fact Bingo…I guessed "Jack", "Skipper" was also a fine guess…A cat has 32 muscles in its ear? And caterpillar has 248 muscles in its head?…Oh by the way a correction from yesterday…you share your Birthday with 9 MILLION other folks…not Billion…apparently the b and the m on the keyboard are pretty close to each other…..

***All bids are subject to change, please call for CONFIRMATION of prices. All information in this letter is from sources deemed reliable, and is for informational purposes only***

Futures are mixed early this morning with wheat leading the charge (it’s a fresh change). Corn is about even while beans are getting nicked up down 8-12. Very little news in the market place this morning. AFBF (American Farm Bureau Federation) estimates that the flood will cause $8 byn in losses. They are projecting that 16% of Iowa corn will be lost totaling over $4 byn in Iowa alone. I read an interesting article this morning about Phosphorus and the world’s reserves. There is no synthetic phosphorus (we can’t make a substitue, and it takes myns of years for it to form). Since grains use huge amounts of phosphorus there is serious concerns about world reserves. China has increased their tariff of domestic phosphorus to 135%.

Former USDA economist Collins says that ethanol processes have impacted the corn and livestock markets. YEP. But to what extent? And what about other market factors? Is corn TOO high? Not if you ask the folks that raise it. Is it too high relative to other products? Nope. It could be that meat products are currently UNDERVALUED due to excess liquidation. If you look at everything in the store, and the cost to get to the store, meat products are probably the best value (relatively CHEAP) IN the store. If you listen to the markets, meat products are TOO cheap, not grains too high. Calls for rolling back the RFS will have more, broad implications. First of all, the ethanol plants that are paid for and running in the black, will continue to grind corn, cuz there is margin in it. Brazilian ethanol NOW works into the US markets EVEN with the .54 tariff. What if we quit making ethanol? What would gas prices do to replace 9 byn gallons of car fuel? Best models suggest a 31% increase in pump prices. My calculator sez $5.43/ gallon. My point is that it matters little what our personal preferences are, but we need to be aware of the potential impact of ‘hurling darts in the dark’. Left alone, the markets will sort it all out...

***Didja Know: Sez here that your birthday is special…you share it with about 9 byn other people in the world…snails can sleep for 3 years (I have known people like that). What is the name of the dog on the cracker jack box???? Answer tomorrow….

***All bids are subject to change, please call for CONFIRMATION of prices. All information in this letter is from sources deemed reliable, and is for informational purposes only***