Grain Marketing Highlights – May 25, 2012

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

Will Greece Stay or Go?
Uncertainty in world equity markets, dry conditions in portions of the U.S Corn Belt, needed rain in the Russian wheat region, strengthening of the dollar, a commodity sell-off driven by non-commercial fund trading, and tight old crop corn and soybean supplies have kept market participants hopping this past week. Most notable is the commodity sell-off that occurred on Tuesday due to the EU situation that has seen the Euro decline in value and the U.S. dollar strengthen. The matter of whether Greece stays a part of the Euro or goes on its own is still pending? Either way the economic problems of the EU will not be going away anytime soon.

Crop Progress
U.S. corn planting was reported to be 96 percent complete, 76 percent emerged, with the crop condition rated at 77 percent good to excellent. U.S. soybeans were 76 percent planted and 35 percent emerged. The U.S. winter wheat crop was reported as 79 percent headed, with 58 percent in the good to excellent category, and 3 percent harvested. Spring wheat was reported to be 99 percent planted, 86 percent emerged, with 74 percent in the good to excellent category.

Overall, crop progress and condition ratings are well ahead of the five year average(s). However, the ink was no sooner dry on this week’s report when market analysts began expressing concerns about portions of the Corn Belt needing rain in order to maintain the current lofty 2012 crop ratings. We have officially entered into a weather market. Decent rains occurring over the weekend would send new crop prices tumbling while insufficient rains would send prices soaring.

USDA Export Sales Report 05/24
Pre-report estimates called for weekly corn export sales at 35.4 to 78.7 million bushels. Total export sales of only 19 million bushels were reported with 6.1 million bushels scheduled for ‘11/‘12. This was below the 13.1 million bushels needed this week to stay on pace with USDA’S demand projection of 1.7 billion bushels. Weekly shipments of 27.1 million bushels were below the 36.1 million bushels needed this week. This report should be viewed as bearish.

Pre-report estimates for weekly export sales of soybeans ranged from 25.7 to 40.4 million bushels. Total export sales were reported at 35 million bushels with 29.4 million bushels scheduled for ‘11/‘12. This was well above the 1.6 million bushels needed this week to stay on pace with USDA’s export demand projection of 1.315 billion bushels. Shipments of 14.7 million bushels were above the 13.3 million bushels needed this week. This report should be viewed as bullish.

Pre-report estimates for weekly wheat export sales ranged from 14.7 to 29.4 million bushels. Total export sales were reported at 30.4 million bushels with 2.7 million bushels slated for ‘11/‘12. This was above the 0.9 million bushels needed this week to stay on pace with USDA’s demand projection of 1.025 billion bushels. Weekly shipments of 20.9 million bushels were below the 36.9 million bushels needed this week. This report should be viewed as bearish.

Market Strategy
Commodity prices are bidding higher in e-trade with soybeans showing double digit gains. It could be that the markets were becoming oversold or that the advancing dollar stabilized, if only briefly. The Dow is currently higher on the day at 12,523. Nearby crude is down about $20 per barrel since the first of March, now at $90 per barrel for nearby crude.

Commodity prices can be expected to remain extremely volatile over the near term. The weather and crop development are likely to take precedence over outside forces in determining whether opportunities for advancing sales are presented in the near term. Rain was reported earlier in the week to have occurred in the Russian wheat region. Traders will be paying close attention to rain events now occurring across the U.S. Corn Belt. Position squaring can be expected ahead of the three day Memorial Day holiday weekend. Currently, Dec ‘12 corn futures are trading at $5.21; Nov ‘12 soybeans at $12.71; and July ‘12 SRW wheat at $6.71m per bushel.

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

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