Grain Marketing Highlights – June 3, 2011

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

Outside Market Forces and Fundamentals at Odds

Corn Analysis
As of May 29, U.S. corn planting progress was reported to be 86 percent complete, 9 points behind the five year average and 11 percentage points behind last year. The U.S. corn crop was also reported to be 66 percent emerged, 12 percent behind the five year average. The initial weekly condition report for the corn crop was placed at 53 percent good and 10 percent excellent. The condition for the U.S. corn crop at the same time last year was 61 percent good and 15 percent excellent. The Linn group, a private forecasting firm, estimated corn plantings at 87.233 million acres, well below USDA’s 92.178 million acre projection. While the final USDA projection won’t be updated until June 30, the general consensus is planted acreage will decline due to late plantings, and flooding along the Mississippi and Missouri Rivers.

Soybean Analysis
U.S. soybean plantings were reported at 51 percent complete, as compared to the five year average of 71 percent. Emergence of the soybeans crop was reported to be about 12 points behind the five year average. Debate continues to grow as to whether bean acres will increase due to less corn being seeded or decline due to the late planting pace and flood concerns. Linn Group’s estimate for soybean planting came in at 74.894 million acres, well below USDA’s 76.609 million acre March 31 projection.

Wheat Analysis
Winter wheat conditions were reported at 26 percent good and 7 percent excellent, compared to 51 percent good and 14 percent excellent last year. Spring wheat plantings were reported at 68 percent planted as compared to the five year average of 95 percent. Emergence reported at 40 percent is 41 points behind last year’s pace.

Market Strategy
2011 U.S. planted acres remain a big unknown? Will we see less U.S. corn acres and/or more or less soybean acres than previously estimated? Until those acres become known the market is likely to move in a sideways to higher trading pattern for corn and soybeans. The underlying assumption is that crop acres are likely to decline from the March intentions report. Fundamentally, this would be price positive for commodity prices.

The primary outside market force working against this argument is the general state of the economy. For example, the Dow has taken a big hit this week due to general economic concerns weighing negatively upon commodity markets. Jobless claims are running higher than expected. This sent commodity markets into a nose dive in yesterday’s trading.

It is reasonable to expect these markets to be driven by fundamentals in the near term, bearing in mind that at some point acreage concerns will become considered as factored into new crop commodity prices. It might be wise to consider incremental sales for new crop corn and soybeans. Dec ‘11 corn futures are currently trading at $6.87; Nov ‘11 soybean futures at $13.87; and July SRW wheat at $7.72 per bushel.

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

 

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