Headlines:
- USDA ACREAGE REPORT IS SCHEDULED FOR JUNE 30TH
- FIRST NOTICE DAY FOR JULY GRAIN AND OILSEED FUTURES IS THURSDAY, JUNE 30TH
- MONSANTO FLAGS ‘SIGNS OF AG RECOVERY‘ – EVEN AS IT UNVEILS PROFITS DROP
MONSANTO CUT ITS PROFIT HOPES, AGAIN, EVEN AS IT HERALDED THE END OF THE AGRICULTURE DOWNTURN, WITH THE DOWNGRADE REFLECTING A $219M HIT ON ARGENTINE TAX ACCOUNTING, BESIDES A WORSENED OPERATIONAL OUTLOOK. THE US-BASED GROUP, THE WORLD‘S BIGGEST SEEDS COMPANY, SAID IT WOULD REPORT PROFITS FOR THE YEAR TO THE END OF AUGUST AT THE “LOW END” OF A RANGE OF $3.36-4.14 PER SHARE. THE DOWNGRADE REFLECTS THE LATEST OF A SERIES OF CUTS IN PROFIT HOPES BY MONSANTO, WHICH HAD INITIALLY EXPECTED TO REPORT FULL–YEAR EARNINGS OF $4.44-5.01 PER SHARE. THREE MONTHS AGO, THE ESTIMATE RANGE STOOD AT $3.72-4.48 PER SHARE. THE GROUP SAID THAT ITS LATEST REVISION REFLECTED “ARGENTINE TAX–RELATED MATTERS“, AND A CHARGE OF $219M AS IT CUT THE VALUE OF DEFERRED TAX ASSETS IN THE SOUTH AMERICAN COUNTRY. “WITH GROWTH IN THE [ARGENTINE] BUSINESS, THE COMPANY WOULD EXPECT SO SEE THIS ALLOWANCE REVERSED PARTIALLY, OR IN FULL, OVER TIME,” THE COMPANY SAID.
Summary:
Investors who are long the grain Soybean markets were not much in the mood for taking chances ahead of tomorrow’s USDA Quarterly Acreage reports. They liquidated positions in the event of continued declines post the report findings.
Nearby Wheat was the biggest loser of the day. Per the USDA reporting, 45% of the US Winter Wheat crop is harvested as of Sunday which was a 25% jump from the prior week. After being up significantly the past two days speculators were quick to take some profits ahead of tomorrow’s USDA report. Speculation has it that the Soybean Acreage forecast is expected to be bearish. But if you have been trading for a while you know how much that is really worth. A Reuters survey shows US growers increasing their Soybean acreage up 1.6 million acres from the previous March forecast of 82.2 million acres. The same survey is calling for a potential drop in the Corn acreage of about .8 million acres. The key for the next few weeks is going to be whether or not hot and dry weather is on the horizon or if beneficial rains are able to enter the picture and persist.
Yesterday, a Goldman Sachs analyst suggested that Corn yield estimates may be underestimated with current crop conditions. His opinion stems from assumptions that current estimates have not taken into effect the recent favorable weather conditions across the majority of the Corn Belt.
Today July and December Corn fell 12.25 and 11 cents. July and November Beans lost 4.75 and 7 cents. July and December Wheat surrendered another 14.50 and 11.75 cents respectively.
