Grain Marketing Highlights – May 6, 2011

Carl German, Extension Crops Marketing Specialist; clgerman@udel.edu

Weather Delays U.S. Corn Planting
Exceedingly wet soils in the key growing areas of the Corn Belt are making it increasingly difficult to remain optimistic about the prospects for U.S. corn production this year. U.S. corn plantings were reported to be 13% complete as of May 1, well behind the five-year average of 40% and last year’s pace of 66%. There have been five years since 1986 that U.S. corn plantings were below 18% by April 30 : including 1993 at 8%; 1995 at 10%; 1999 at 18%; 2008 at 17%; and this year at 13%. Past history would suggest both an acreage cut and a yield reduction are in the making for 2011 U.S. corn production. The average acreage reduction for these late planted years is 1.278 million acres, while final yields averaged 7.3% below trend. Trend line yield was being estimated at 162 bushels per acre before the late plating scenario developed.

USDA Export Sales Report
U.S. soybean, corn, and wheat export sales were all reported to be bearish for the week ending on April 28. Several factors could be at play in the sluggish export sales report, among them the possibility that we may be experiencing some demand destruction due to commodity price levels. Further, competition from the Southern Hemisphere crop is now in play.

Pre-report estimates for weekly export sales of soybeans ranged from 5.5 to 9.2 million bushels. Total export sales were reported at 0.8 million bushels, below the 3.7 million bushels needed this week to stay on pace with USDA’s demand projection of 1.58 billion bushels. Total shipments of 7.4 million bushels were below the 13.3 million bushels needed this week. This report is bearish.

Pre-report estimates for weekly corn export sales ranged from 13.8 to 21.7 million bushels. Total export sales for the week were reported at 11.2 million bushels, below the 18.3 million bushels needed this week to stay on pace with USDA’s demand projection of 1.95 billion bushels. Total shipments of 31.4 million bushels were below the 43.8 million bushels needed this week. This report should be considered bearish.

Pre-report estimates for wheat ranged from 9.2 to 16.5 million bushels. The weekly report showed total export sales (old-crop and new-crop) of 20.2 million bushels, with old-crop sales of 10.1 million bushels above the 0.1 million bushels needed this week to stay on pace with USDA’s demand projection of 1.275 billion bushels. Shipments of 31.9 million bushels were below the 44.7 million bushels needed this week. The report is considered bearish. Total shipments fell further behind pace with only four weeks left in the 2010-2011 marketing year.

Market Strategy
Corn, soybean, and SRW wheat futures for both old and new crop contracts lost ground this past week attributed to non-commercial long liquidation. Soybean, corn, and wheat futures are expected to continue to lose ground through the remainder of the week. Corn futures improved the last couple of trading days supported by late planting reports and trader concern about the five to ten day forecast. However, with outside market forces currently impacting commodity prices negatively, namely the Dow (12,647) and crude oil prices (nearby at $109.24, about $5.00 per barrel off the recent high of $114.00 per barrel), corn futures are likely to follow the near term decline. Technical analysis suggests that there aren’t any sell signals in these markets at the present time. Currently, Dec ‘11 corn futures are trading at $6.11; Nov ‘11 soybean futures at $13.38; with July ‘11 SRW wheat futures at $7.72 per bushel. USDA will release the May supply and demand report on May 11th.

For technical assistance on making grain marketing decisions contact Carl L. German, Extension Crops Marketing Specialist.

 

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