Grain Marketing Highlights – May 4, 2012

Carl German, Extension Crops Marketing Specialist;

Seasonal Rally Stalls in Volatile Trading
The large sell-off in Wednesday’s session was attributed to commercial and noncommercial (speculative) trading. Specifically, noncommercial long liquidation impacted corn, soybean, and SRW wheat futures prices negatively across the board. By the end of the day session, old crop corn was down 17, new crop down 7; old crop soybeans down 17, new crop down 24; and old crop SRW wheat down 26, new crop down 28 cents per bushel, respectively. Market analysts have been warning such an occurrence was in the offing. One reason given for the sell-off was growing concern over the European economy, which just might be the 800 pound gorilla in the room. Others mentioned were rumors that China may have canceled on some old crop corn bookings, and the dollar strength buoyed by fears of a lingering and deepening recession in Europe.

These markets continue to have bullish sentiments in old crop corn, old crop soybeans, and new crop soybeans. However, at this stage in the growing season we have more questions than answers concerning use, stocks on hand, and production potential for the 2012 cropping season. As of April 29 U.S. corn planting was reported at 53 percent complete, as compared to 27 percent for the five year average. U.S. corn exports for the week ending April 26 were extremely bullish for corn, extremely bullish for soybeans, and slightly bearish for wheat.

USDA’s next monthly Supply and Demand Report will be released on May 10. The report is expected to be important in regard to use and Southern Hemisphere production projections. U.S. production potential will still be based upon baseline projections and planting intentions.

Market Strategy
Making decisions on whether to advance sales continues to be somewhat of a guessing game at this point in time. For example, we won’t know 2012 corn and soybean U.S. crop size until the June 30 actual plantings and the July S/D reports. Therefore, we continue to get mixed signals on whether additional sales are warranted at this point in time. One has about a 50/50 chance of being considered ‘right’ on pulling a sales trigger now as opposed to waiting. A most important consideration in deciding to advance a sale lies in determining whether one can make money at current price levels? In overnight e-trade, Dec ‘12 corn futures closed at $5.30; Nov ‘12 soybeans at $13.66; and July ‘12 SRW wheat at $6.17 per bushel.

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

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