Grain Marketing Highlights – June 15, 2012

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

USDA’s June Supply/Demand Report Takes Backseat to Weather Concerns
On Tuesday the release of USDA’s June supply and demand report was considered to be a non-event and somewhat price negative. In day trade on Wednesday underlying support was recognized in tight old crop corn supply with the July futures contract rallying 8 cents per bushel. In overnight e-trade corn, soybean, and SRW wheat futures prices rallied across the board. The reason for the current rally, which began on Wednesday night, is said to be weather related. According to DTN, the Palmer Drought Index for the five key Corn Belt states (IA, IL, IN, NE, and MN) at the end of May reflected mild drought conditions in portions of all five states. This is not to say that yields at or near trend line are not achievable. However, it does suggest that timely rains will be needed for the rest of June and July to be able to achieve yields that are at or near trend. A full blown weather market could develop in the event that the drought worsens in the heart of the Corn Belt.

U.S. Supply/Demand Estimates Summary, released 6/12, Million Bushels

Corn Soybeans Wheat
Crop Year 11-12 12-13 12-13 11-12 12-13 12-13 11-12 12-13 12-13
Report Date 06/12 05/10 06/12 06/12 05/10 06/12 06/12 05/10 06/12
Carryin 1,128 851 851 215 210 175 862 768 728
Production 12,358 14,790 14,790 3,056 3,205 3,205 1,999 2,245 2,234
Imports 20 15 15 15 15 15 120 120 120
Tot Supply 13,506 15,656 15,656 3,286 3,430 3,395 2,982 3,133 3,082
Feed 4,550 5,450 5,450 180 230 220
Crush/Mill* 1,375 1,395 1,395 1,660 1,655 1,645 940 945 945
Ethanol Prod 5,050 5,000 5,000
Seed/Other 30 30 30 116 125 125 79 73 73
Exports 1,650 1,900 1,900 1,335 1,505 1,485 1,055 1,150 1,150
Total Use 12,655 13,775 13,775 3,111 3,285 3,255 2,254 2,398 2,388
Carryout 851 1,881 1,881 175 145 140 728 735 694
Stocks/Use Rate 6.70% 13.70% 13.70% 5.60% 4.40% 4.30% 32.30% 30.70% 29.10%
Avg Price $6.10 $4.60 $4.60 $12.30 $13.00 $13.00 $7.25 $6.10 $6.20

*Excludes corn for ethanol

 

World S& D Summary, Million Metric Tons

Corn Soybeans Wheat
Crop Year 11-12 12-13 12-13 11-12 12-13 12-13 11-12 12-13 12-13
Report Date 06/12 05/10 06/12 06/12 05/10 06/12 06/12 05/10 06/12
Carryin 124.32 127.56 129.19 70.1 53.24 53.36 197.23 197.03 195.56
Production 872.98 945.78 949.93 236.38 271.42 271.03 694.17 677.56 672.06
Total Supply 997.3 1,073.30 1,079.12 306.48 324.66 324.39 891.4 874.59 867.62
Feed 509.08 549.54 553.31 148.29 133.7 131.67
Crush 223.41 234.22 234.05
Other 359.03 371.47 370.08 30.01 30.92 30.9 547.55 552.77 550.2
Total Use 868.11 921.01 923.39 253.42 265.14 264.95 695.84 686.47 681.87
End Carryout 129.19 152.34 155.74 53.36 58.07 58.54 195.56 188.13 185.76
Stocks/Use Rat 14.9% 16.5% 16.9% 21.1% 21.9% 22.1% 28.1% 27.4% 27.2%

USDA Export Sales Report (released 06/14) 

Pre-report estimates for weekly corn export sales ranged from 13.8 to 29.5 million bushels. For the week ending June 7 total export sales of 6.7 million bushels with 3.6 million bushels, a marketing year low, scheduled for ‘11/‘12. This was below the 10.4 million bushels needed this week to stay on pace with USDA’S export projection of 1.65 billion bushels. Weekly shipments of 17 million bushels were below the 33.8 million bushels needed this week. This report is viewed as bearish.

Pre-report estimates for weekly export sales of soybeans ranged from 16.5 to 27.6 million bushels. Total weekly export sales were reported at 36.9 million bushels with 15.6 million bushels scheduled for ‘11/‘12. Year to date soybean export sales now total 1.352 billion bushels which is above USDA’s projection of 1.335 billion bushels. Shipments of 13.8 million bushels were below the 14.7 million bushels needed this week. This report is viewed as bullish.

Pre-report estimates for wheat ranged from 5.5 to 12.9 million bushels. Total export sales for the week were reported at 15.9 million bushels. This was below the 22.5 million bushels needed to stay on pace with USDA’s 1.15 billion bushel export demand projection. Shipments of 24.5 million bushels were above the 22.5 million bushels needed this week. This report is viewed as neutral.

Market Strategy
Non-commercial (speculative) buying interest needs to return to the commodity markets before a significant rally can be sustained. We can also expect outside market forces to continue having an impact. The Dow’s reaction to today’s jobs report which placed first time unemployment filings above pre-report expectations is cause for concern. The general slowing of the U.S. and world economies could prove to be limiting to the current rally. A weaker dollar should provide some support. Weekly crop conditions were reported to have dropped from the previous week for both U.S. corn and soybeans. Currently, Dec ‘12 corn futures are trading at $5.18; Nov ‘12 soybeans at $13.14; and July SRW wheat at $6.27 per bushel. Commodity traders will be trading the ever changing weather forecasts over the next two weeks while awaiting the June 30 Planted Acreage report.

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

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