Yesterday we threw out our production estimate, but there is no other number that is so confusing as the export number. Analysts can pour over yields and abandonment and rainfall data and have the crop size to within ½ Mb by the Sep report. But when it comes to exports, one has to factor in the crazy Chinese policy. To get started on this number, we compare cumulative sales today of 3.572 Mrb to last year at 4.565 Mrb. Converting to 480#, we have 3.684 Mb vs 4.708 Mb. Last year’s final exports were 13.100 Mb, so taking a simple straight-line comparison, this year’s final exports should be 10.25 Mb, or about 350 kb below the USDA. Our figure is 10.0 Mb, and we keep toying around with the idea that exports may be a lot lower.
Due to crop size being 435kb larger than the USDA, and exports some 600kb smaller, our end stocks at 3.735 Mb is thus larger by 900kb vs the USDA. Their 2.8 Mb end stocks implies prices much, much higher than current, so perhaps the market believes something closer to our number.
Varner View
We plan on putting farmer hedges down +8500, and will look for spots for spec shorts also. Our fear is not that 8500-8600 is a good sell area, it is rather that we remember the pain we were in when the market ran from 84c, to 94c in 2 weeks. Its that recent memory that makes us more than wary to sell what has truly been a wild horse this summer. Note: Rogers will be on the road to Austin on Thursday-Sunday, looking at crops in the mid South into Texas. There is also that Longhorn game vs the Rebels this weekend.
Technicals
A 70 day cycle has been apparent for the last year, beginning on 13 Aug 2012 at 7541 for a minor low. Next was a major low, due on 19 Nov 2012, which occurred via a low 8 days before and 4 days after the due date. A minor low fell on time on 25 Feb 2013. Next was a major low, due on 3 June 2013, at 8172. The next low is due ideally today, but probably occurred Friday at 8211. The next cycle is due 20 Dec 2013, +/- 3 days.
