Grain Marketing Highlights – May 27, 2011

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

Commodity Markets Turn Higher
Planting delays in the Eastern Corn Belt and the Dakotas have raised serious concerns as to whether U.S. farmers will reach their planting goals this year. After ignoring Monday afternoon’s Weekly Crop Progress report, that showed U.S. corn plantings to be 79% complete (8 points behind the five year average), commodity markets turned higher Wednesday, with higher opening calls for Thursday’s trading session. A part of the reason for the current surge in corn, soybean, and wheat prices has to do with the uncertainty in determining just how many acres the U.S. will actually get planted to corn and soybeans this season. The March 31 Planting Intentions report called for 92.2 million acres to be planted to corn and 76.6 million acres to be planted to soybeans. Some are suggesting that time is running out. Saturated fields in places like North Dakota, Indiana, and Ohio are not likely to get planted in a timely fashion. Timely fashion, for crop insurance purposes, in the Eastern Corn Belt translates to June 5. As of May 22, 14.2 million acres remained to be planted in the U.S. A large portion of those remaining acres are either flooded, and/or saturated.

USDA Export Sales Report 05/26
Pre-report estimates for weekly export sales of soybeans ranged from 5.5 to 11.9 million bushels. The weekly report showed total old-crop export sales of 6 million bushels, above the 2 million bushels needed this week to stay on pace with USDA’s demand projection of 1.55 billion bushels. Total shipments of 15.1 million bushels were above the 12.7 million bushels needed this week. This report is considered bullish.

Pre-report estimates had weekly corn export sales 19.7 to 35.4 million bushels. The weekly report showed total export sales (old-crop and new-crop) of 30.5 million bushels, with old-crop sales of 28.6 million bushels, well above the 14.7 million bushels needed this week to stay on pace with USDA’s demand projection of 1.9 billion bushels. Total shipments of 37.5 million bushels were below the 42.4 million bushels needed this week. This report is considered neutral.

Pre-report estimates for export sales of wheat ranged between 14.7 to 25.7 million bushels. The weekly report showed total export sales (old-crop and new-crop) of 15.9 million bushels, with old-crop sales of 1 million bushels bringing year-to-date sales to 1.3 billion bushels, above USDA’s 1.275 billion bushel demand projection. Shipments of 28.9 million bushels were well below the 62.4 million bushels needed this week. This report is considered bearish. Next week’s report will be the last of the 2010-2011 marketing year for wheat with 96 million bushels needed in shipments to reach USDA’s target.

Market Strategy
The window of pricing opportunity presented by the planting scenario above is likely to be short lived. It will not take long before traders consider planting delays already factored into commodity prices. It is within the realm of reason to expect Western Corn Belt producers to pick up some of the slack, planting more acres than their March intentions. These markets are also being heavily influenced by outside market forces. An economic crisis still prevails across the globe with large scale economic problems recently capturing headlines in Spain, Italy, Greece, and the United States. Further, continuing reports of demand shifts occurring due to the price level being bid by commodities has become a recurring theme. If a weather market doesn’t develop this summer, we could be seeing the highs for this growing season being made between now and early June. Therefore, it might be wise to consider scaling up on corn, soybean, and wheat sales as prices rise. Currently, on the open (5/26/11) Dec corn futures are trading at $6.76; Nov ‘11 soybean futures at $13.73; with July SRW wheat futures at $8.16 per bushel.

 

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