Grain Marketing Highlights

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

Commodity Prices Higher on Bearish Report
On Tuesday, August 12th USDA released the monthly supply and demand report. The report was viewed as bearish for corn, neutral to bearish for soybeans, and bearish for wheat. Nevertheless, as of the close of Wednesday’s trading corn, soybean, and wheat prices were higher with corn rallying nearly 70 cents per bushel. Expanded daily trading limits are to be in effect for Thursday’s trading due to limit up moves for corn, soybeans, and wheat in Wednesday’s trading. The markets are seeking price direction. Even if a counter seasonal rally has now begun, the markets will continue to be extremely volatile and susceptible to externalities/outside factors.

Corn Analysis
USDA raised the yield estimate of U.S. corn production to 155 bushels per acre, a 6.6 bushel/acre increase from last month. Planted acres for U.S. corn were reduced 300 thousand acres, now estimated at 87 million acres. Surprisingly, the estimate for harvested acres increased by 400 thousand acres, now placed at 79.3 million acres. Total U.S. corn production is now forecast at 12.288 billion bushels, an increase of 573 million bushels from last month and a decrease of 786 million bushels from last year. Ending stocks for U.S. corn were increased by 300 million bushels and are now placed at 1.133 billion bushels. World ending stocks for corn were projected to be 7.07 million metric tons larger than last month and 10.08 mmt less than last year. USDA lowered the season average price range for corn 60 cents per bushel on both ends of the price range, now estimated at $4.90 to $5.90 per bushel.

Soybean Analysis
The yield estimate for U.S. soybeans was lowered by 1.1 bushels, now estimated at 40.5 bushels per acre. The harvested acreage projection increased 1.2 million acres and is now placed at 73.3 million acres. Ending stocks of U.S. soybeans, projected at 135 million bushels, are the same as last year. World ending stocks were increased slightly from last month’s projection and last year. The season average price for U.S. soybeans was reduced on both ends of the price range, now estimated at $11.59 to $13.00 per bushel.

Wheat Analysis
U.S. production for all wheat, harvested acreage, and yield per acre were unchanged form last month. U.S. production for all wheat, U.S. ending stocks, and world stocks have increased significantly from last year. The season average price for all wheat was lowered 25 cents per bushel on both ends of the price range, now estimated at $6.50 to $8.00 per bushel.

Market Strategy
The price charts for corn, soybeans, and wheat are currently indicating that we may be seeing the beginning of a counter seasonal rally. If true, then we’d expect commodity prices to improve from their current levels. Therefore, no additional sales should be made at this point in time. Decisions will need to be made in the very near future concerning storing unpriced grain or oilseeds in a long cash position, storing grain and buying puts, selling cash grain and buying a call, or simply selling the cash grain and oilseeds. Price volatility, basis weakness, and futures market carry will play a role in making those decisions. Currently, Dec ’08 corn futures are trading at $5.64; Nov ’08 soybean futures at $12.62; and Dec ’08 SRW wheat futures at $8.82 per bushel. For technical assistance on making grain marketing decisions contact Carl L. German, Extension Crops Marketing Specialist.

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