Posts Tagged ‘grain marketing’

Grain Marketing Highlights – July 13, 2012

Thursday, July 12th, 2012

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

Commodity Prices Turn Higher on Release of USDA’s July Supply and Demand Report
As one might have expected, upon the release of July’s USDA supply and demand report new and old crop corn, soybean, and SRW wheat prices continue to surge higher in e-trade this morning recording double digit gains across the board. USDA made major reductions in projected yield for U.S. corn and soybeans with the national corn yield estimated at 146 bushels per acre, a reduction of 20 bushels since last month. The yield projection for U.S. soybeans was lowered to 40.5 bushels per acre, a reduction of 3.4 bushels from the June estimates. Projected ending stocks for U.S. corn were reduced by almost 700 million bushels from last month for the 2012/13 marketing year. Further, U.S. ending stocks for soybeans were reduced 10 million bushels and U.S. all wheat ending stock projections were reduced by 30 million bushels from the June estimate. Stocks-to-use ratios were projected lower for corn, soybeans, and wheat in both the U.S. and World.

The reduction in the ending stocks estimate for wheat was the only drop not based upon a reduction in the projected yield. Total supply for wheat was increased by 5 million bushels from a 15 million bushel increase in beginning stocks, and a 10 million bushel decrease in production from fewer acres harvested. USDA increased the projected yield for all U.S. wheat from 45.4 last month to 45.6 bushels per acre in the July report. The primary reason for the reduction in the wheat ending stocks estimate was due to a 50 million bushel increase in the projection for U.S. wheat exports offset by a 5 million bushel increase in total supply, a 5 million bushel increase in food, and a 20 million bushel decrease in feed and residual use.

US Supply/Demand Summary, 7/11/12, 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

07/11

06/12

07/11

07/11

06/12

07/11

07/11

06/12

07/11

Carryin

1,128

851

903

215

175

170

862

728

743

Production

12,358

14,790

12,970

3,056

3,205

3,050

1,999

2,234

2,224

Imports

22

15

30

15

15

15

115

120

120

Tot Supply

13,508

15,656

13,903

3,286

3,395

3,235

2,977

3,082

3,087

 

Feed

4,550

5,450

4,800

169

220

220

Crush/Mill*

1,375

1,395

1,390

1,675

1,645

1,610

940

945

950

Ethanol Prod

5,050

5,000

4,900

Seed/Other

30

30

30

101

125

124

77

73

73

Exports

1,600

1,900

1,600

1,340

1,485

1,370

1,048

1,150

1,200

Total Use

12,605

13,775

12,720

3,116

3,255

3,105

2,234

2,388

2,423

Carryout

903

1,881

1,183

175

140

130

743

694

664

Stocks/Use Rate

7.20%

13.70%

9.30%

5.60%

4.30%

4.20%

33.30%

29.10%

27.40%

Avg Price

$6.10

$4.60

$5.90

$12.30

$13.00

$14.00

$7.25

$6.20

$6.80

*Excludes corn for ethanol

World S& D Summary, 7/11/12, 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

07/11

06/12

07/11

07/11

06/12

07/11

07/11

06/12

07/11

Carryin

124.31

129.19

129.37

70.13

53.36

52.51

197.23

195.56

197.18

Production

873.7

949.93

905.23

235.88

271.03

267.16

694.69

672.06

665.33

Total Supply

998.01

1,079.1

1,034.6

306.01

324.39

319.67

891.92

867.62

862.51

 

Feed

507.78

553.31

535.95

147.16

131.67

130.33

Crush

223.87

234.05

232.39

Other

360.86

370.08

364.56

29.55

30.90

30.76

547.58

550.20

549.73

Total Use

868.64

923.39

900.51

253.42

264.95

263.15

694.74

681.87

680.06

 

End Carryout

129.37

155.74

134.09

52.51

58.54

55.66

197.18

185.76

182.44

Stocks/Use Rat

14.90%

16.90%

14.90%

20.70%

22.10%

21.20%

28.40%

27.20%

26.80%

Market Strategy
It will take some time for traders to absorb what this report actually means in terms of 2012 U.S. corn and soybean production. There is a time lag between when the data is collected and when the estimates are published, roughly about a week to 10 days. U.S. crop conditions during that time did not improve.

It is important to note that we are currently in a demand driven market. Evidence of that is the nearly 50 million bushel increase in beginning stocks for U.S. corn in the ‘12/‘13 current marketing year that came from adjustments made in the last ‘11/‘12 marketing year. The increase in beginning stocks may be due to demand rationing. Commodity prices are up for a fourth week in a row. Prices do not go up forever. Earlier today in e-trade, Dec ‘12 corn futures were at $7.33; Nov ‘12 soybeans $15.67; and July ‘12 SRW wheat at $8.20 per bushel. Corn and soybean futures prices have softened considerably since early Wednesday morning reflecting, among other things, the extreme volatility in these markets and profit taking. By 2 p.m. EDT on Wednesday afternoon old and new crop corn, soybean, and SRW wheat futures prices were recording double digit losses from Tuesday’s close. USDA is currently considering possible drought relief measures that may be needed to assist farmers hit hard by the drought. An announcement along those lines should be forthcoming in the near future.

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

Grain Marketing Highlights – July 6, 2012

Friday, July 6th, 2012

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

Drought Continues to Reduce U.S. Crop Prospects
USDA will release their July Supply and Demand report on Wednesday, July 11. The report will publish the usual pre-report industry and USDA’s ‘official’ crop yield estimates. It will be very difficult to establish estimates that turn out to be accurate depending to a large degree on whether the drought continues to linger. A review of the U.S. drought monitor this morning seems to indicate that the drought continues to worsen across the country now encompassing almost the entire area of the Midwest Corn Belt, the Southeast, Southwest, as well as the Mid-Atlantic regions http://droughtmonitor.unl.edu/. The weather pattern remains hot and dry in the near term, but the long-term forecast is showing some hints of better weather eight to 12 days out. Crop conditions released on Monday afternoon dropped another 8 percent with 48% of the nation’s corn crop now rated as good to excellent, and another 25% of the crop rated as poor to very poor. A quarter of the crop was noted as silking, well ahead of average. Crop conditions have now dropped nearly 30% in six weeks.

The impact of the drought is being reflected in soaring commodity prices with new crop corn reaching a new life-of-contract high at $7.08 per bushel in yesterday’s trade. There is an old adage in commodity trading “the bulls sometimes profit, the bears sometimes profit, but the hogs always get slaughtered”. Current crop conditions would suggest that the bulls are not happy because even though they waited on higher prices, they likely have little to no crop to sell unless it is irrigated or sitting in a production area receiving timely rains. The bears are not happy because they’ve sold early and at lower prices with the likelihood of no remaining crop to sell. Meanwhile, the hogs have no crop sold and no crop to sell. Obviously, the current situation is no laughing matter concerning anyone – bulls, bears, or hogs.

Market Strategy
The corn market softened overnight due to a rumor circulating that EPA could cut the ethanol mandate by 20 percent (Source: DTN). Even so overall current conditions suggest that advancing new crop sales should be placed on hold. We will need to see the production estimates in next Wednesday’s report before considering further sales decisions for the current and/or next marketing year. New crop Dec ‘12 corn futures are currently trading at $6.95; Nov ‘12 soybeans at $15.08; with July SRW wheat at $8.00 per bushel. Dec ‘13 corn futures are trading at $6.07; Nov ‘13 soybeans at $13.00; with July ‘13 SRW wheat futures at $8.26 per bushel.

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

Grain Marketing Highlights – June 29, 2012

Friday, June 29th, 2012

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

U.S. Crop Conditions Continue to Decline
Tomorrow’s reports are important, however, focus on the weather is likely to take precedence over those reports barring any major surprises. For a look at the progression, since mid-May 2012, of what has been termed as a flash drought go to www.droughtmonitor.unl.edu. The animated version of the weather map explains the growing severity of the drought that has taken a grip on large portions of the Corn Belt over the last five to six weeks. So far the forecast has not changed with a decline in conditions likely in next Monday’s report. U.S. crop conditions worsened again in Monday afternoon’s report, go to Google and bring up U.S. Crop Conditions.

 

Pre-Report Planted Acreage and Quarterly Grain Stock Estimates
USDA’s June Planted Acreage and Quarterly Grain Stocks reports will be released Friday June 29. Given below are the pre-report industry average, high, low, March 30 estimates and last year’s final (2011) estimates. On average acreage increases are expected over the March 30 intentions report for new crop 2012 U.S. corn and soybean production. What matters to commodity prices is the size of the increase(s) in acreage and whether any downward revisions are seen, the later possibly being price positive especially with the dry weather being experienced throughout large portions of the Corn Belt.

Pre-report expectations are for quarterly U.S. corn stocks to be less than last year, soybean stocks to be higher, and all U.S. wheat stocks to be lower. Commodity traders will be looking for any possible surprises, deviations from pre-report expectations, that may be revealed in the report?

 

ACREAGE (million acres) USDA

3/30/2012

USDA

Final 2011

6/29/2012 Average High Low
Corn

95.96

96.76

94.30

95.86

91.92

Soybeans

75.58

76.54

74.50

73.90

74.98

All Wheat

56.85

59.34

55.90

55.91

54.41

Spring

12.66

13.48

12.00

11.98

12.39

Durum

2.30

2.45

2.18

2.22

1.37

Grain Sorghum

6.12

6.30

5.98

5.95

5.48

All Cotton

13.00

13.30

12.70

13.20

14.7

QUARTERLY STOCKS (billion bushels)
6/1/2012 Average High Low

3/1/2012

6/1/2011

Corn

3.182

3.500

2.982

6.009

3.670

Soybeans

0.640

0.662

0.595

1.372

0.619

Wheat

0.726

0.748

0.705

1.201

0.862

Grain Sorghum

0.051

0.062

0.040

0.108

0.080

Source: DTN

Marketing Strategy

Rising markets are tricky, especially weather markets. The reason being that weather markets can turn on a dime. So those that can advance sales are wise to do so on an incremental basis. Options can be used but must be used wisely when and if the opportunity is presented. For example, a $6.30 Dec ‘12 corn put has a premium of 52 cents per bushel in this morning’s trade. A decision to purchase the $6.30 put would guarantee a minimum price of $5.78 plus or minus basis. Assuming a 25 over basis for fall delivery equates to a minimum sales price of $6.03 per bushel or better for new crop corn. Duly noted the premium cost in the example is considered to be on the high side. Watching for opportunities to use a put might be worth considering as time passes?

Tomorrow’s reports could weigh in on the bump that we are getting from the weather market as could a change in the forecast. One observation is that open interest is declining as prices have risen? Last year the high price for new crop corn occurred on July 5. Overall we’d look for position squaring in today’s trade ahead of the report. Today’s export sales report as of the week ending June 21 was bearish for U.S. corn, neutral for soybeans, and bearish for wheat. Outside market forces are also currently running negative to commodity prices. Dec ‘12 corn futures are currently trading at $6.36; Nov ‘12 soybean futures at $14.06; and July SRW wheat at $7.23 per bushel.

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

Grain Marketing Highlights – June 22, 2012

Friday, June 22nd, 2012

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

Crop Conditions Deteriorate Again
The nation’s 2012 corn crop is now rated as 63% good to excellent, a three point drop from the week before and the second consecutive week that conditions have declined. Meanwhile, soybean conditions dropped four points with 56% of the crop now rated as good to excellent, week ending June 17. Eleven of eighteen sates that make up 95% of the nation’s soybean production have double digit ratings for soybeans in the poor to very poor categories. The National Weather Service forecast for the next seven to ten days suggests that conditions could deteriorate further this week. Bottom line – a 166 bushel per acre national corn yield is not likely to be attainable. Old crop domestic soybean supplies might need to be rationed thereby providing support to prices.

Market Strategy
U.S. farmers can count on an early harvest for the 2012 crop. This means that the window of opportunity for advancing pre-harvest sales for both corn and soybeans is likely to close much earlier than normal. Since the first of the month through the beginning of the third week of June new crop Dec ‘12 corn futures prices have rallied by about 60 cents per bushel. New crop Nov ‘12 soybean futures prices have rallied by nearly $1.50 per bushel. Old crop July ‘12 corn futures rallied by about 60 cents per bushel an d old crop July ‘12 soybeans rallied by almost $1.00 per bushel. New crop July ‘12 SRW wheat futures have rallied 50 cents per bushel over the past week due to dry conditions in parts of the world e.g., Russia and the Black Sea region. As of Monday, June 18 about 50% of the U.S. winter wheat crop was reported as harvested.

Considering the magnitude of the recent rally which appears to be largely weather related, it might be wise to consider advancing both new crop and old crop sales for both corn and soybeans. How much? To some degree that depends upon the amount that one has previously booked. The recent rally presents an opportunity to bring new crop sales up to the 50% to 75% level and too complete old crop sales in the event one is holding onto old crop corn or soybeans. If the rally continues then additional opportunities will be presented for forward pricing remaining pre-harvest new crop sales needs and to begin pricing a portion of intended 2013 production. Currently in e-trade, Dec ‘12 corn futures are at $5.63; Nov ‘12 soybean futures at $13.92; and July ‘12 SRW wheat futures are trading at $6.77 per bushel.

The next round of trade data will be released on June 29 when USDA releases the Quarterly Grain Stocks in All Positions and the Planted Acreage reports.

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

Grain Marketing Highlights – June 15, 2012

Friday, June 15th, 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.

Grain Marketing Highlights – June 8, 2012

Friday, June 8th, 2012

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

Commodity Markets Remain in a Highly Volatile Situation
Corn, soybean, and wheat futures prices have struggled this week to regain some of their recent losses that were brought on by poor performance in the equity markets. However, the tone changed somewhat in Wednesday’s trade with rumors abounding throughout the European and U.S. economies about possible actions that might be taken in the Euro and U.S economies. In the U.S. the Federal Reserve Chairman, Ben Bernanke, spoke today with the markets said to be anticipating some type of action in order to bolster the economy. Just what might be done, if anything at this point in time, is not known since no specifics were given. Meanwhile, dry conditions in the Eastern Corn Belt continue to provide support to commodity prices.

USDA Export Sales Report 06/07
Pre-report estimates placed d weekly corn export sales at 15.7 to 31.5 million bushels. Total export sales were reported at 15.7 million bushels with 9.9 million bushels scheduled for ‘11/‘12. This was below the 14 million bushels needed this week to stay on pace with USDA’S demand projection of 1.7 billion bushels. Weekly shipments of 28.9 million bushels were below the 37.1 million bushels needed this week. This report was viewed as bearish.

Pre-report estimates for weekly soybean exports ranged from 18.4 to 36.7 million bushels. Total export sales were reported at 18.2 million bushels with 8.1 million bushels scheduled for ‘11/‘12. Year-to-date sales are now at 1.336 billion bushels, above USDA’s export projection of 1.315 billion bushels. Shipments of 16.2 million bushels were above the 13.4 million bushels needed this week. This report was viewed as bullish.

Pre-report estimates for weekly wheat exports ranged from 11 to 18.4 million bushels. The final weekly report of the ‘11/‘12 marketing year placed old-crop export sales at 1.1 million bushels. This puts year-to-date sales at 1.026 billion bushels. USDA’s export demand projection for U.S. wheat in the current marketing year was 1.025 billion bushels. However, weekly shipments of 19.5 million bushels were well below the 66.2 million bushels needed this week to reach USDA’s target. This report was viewed as bearish.

Market Strategy
The next USDA Monthly Supply/Demand report will be released on Tuesday, June 12th. It will be followed by the Planted Acreage report to be released on June 12th. In the event that huge acreage increases for U.S. corn and soybean production are confirmed, possibly above the March 31st Planting Intentions numbers, we could see new crop prices (particularly for corn) moving much lower than current levels. In order to take prices higher from current levels we’d likely need to see a weather scare occur this summer in the Corn Belt.

Currently in e-trade, Dec ‘12 corn futures are bid at $5.28; Nov ‘12 soybeans at $13.27; and July SRW wheat at $6.36 per bushel. Last week it was suggested that one might want to ride the weather market before advancing new crop corn and soybean sales. A weather market could continue to help in bringing on better pricing opportunities. However, it might be wise to consider taking some protection on remaining sales needs.

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

Grain Marketing Highlights – June 1, 2012

Friday, June 1st, 2012

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

Weather and Outside Market Forces Impacting Commodity Prices
Recent rain may not be enough to alleviate declining crop conditions in the Eastern Corn Belt from now until the weekend according to crop observers. The U.S. corn crop declined by 5 points in the good to excellent categories from the week of May 20 to May 27. The conditions for crop development are important because it would take a nearly ideal growing season to achieve USDA’s projection of a 2012 U.S. average corn yield of 166 bushels per acre. For that to have a chance of happening U.S. crop conditions would have to take a significant leap forward when this week’s conditions are reported, week ending June 3. More rain is in the forecast between now and the weekend, however observers are suggesting it might not be enough to bring on the ideal conditions that are necessary to achieve the initial yield projection. Crop conditions begin being reported for U.S. soybeans on June 3. The Black Sea region and Russian grain producing areas are also reporting dry conditions that are likely impeding crop development.

Status of the Euro Remains Up in the Air
The equity and commodity markets have taken a pounding this week due to the uncertainty coming out of the European Union. The Dow has seen a significant drop (now at 12,419) while the dollar has increased in value (nearby at 82.925). The increasing value of the dollar is making U.S. commodities more expensive overseas. The weekly export report released this morning (May 31) was bearish for corn, bearish for wheat, and bullish for soybeans. As of this writing it would not be prudent to suggest what the outcome might be for the euro and the European Union. An analyst suggested this week that the impact wouldn’t necessarily be all that bad to world markets as long as the process of either mending and/or amending the European Union is orderly, key word being ‘orderly’.

Market Strategy
To some degree the diametrically opposed signals that we are getting concerning the grain markets signal different courses of action. Non-commercial longs have been exiting commodities positions for several weeks due to the uncertainty concerning potential crop size in the U.S./world and to a general slowdown in U.S. and world economies. A U.S. corn crop projected at the 166 bushel per acre variety would take new crop corn prices lower than they are now. On the other hand, tight old crop U.S. corn and soybean supplies suggest that it wouldn’t take much of a weather scare to rally prices from their current levels. Providing initial sales for intended 2012 corn and soybean production are booked, a gut feeling is to go with the weather uncertainty placing additional sales on hold. The next USDA monthly supply and demand report will be issued on Tuesday, June 12. Currently, in e-trade Dec ‘12 corn futures are at $5.12; Nov ‘12 soybeans at $12.89; and July ‘12 SRW wheat at $6.50 per bushel.

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

Grain Marketing Highlights – May 25, 2012

Thursday, May 24th, 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.

Grain Marketing Highlights

Friday, May 18th, 2012

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

Weekly Crop Progress 05/13
U.S. corn planting was reported to be 87 percent complete with 56 percent emerged as of Sunday May 13. U.S. soybean planting was 46 percent complete and 19 percent emerged. Winter wheat was 72 percent headed with overall conditions in much better shape than last year. Spring wheat and barley were also reported to be well ahead of the five year average for planting and emergence.

USDA Export Sales Report 05/17
Pre-report estimates for the week ending May 10 placed weekly corn export sales at 31.5 to 55.1 million bushels. Total export sales for the week were recorded at 34.1 million bushels with 13.4 million scheduled for the current marketing year. This was above the 13.1 million bushels needed this week to stay on pace with USDA’s export projection of 1.7 billion bushels. Weekly shipments of 26.2 million bushels were below the 35.5 million bushels needed this week. This report is viewed as slightly bearish.

Pre-report estimates for weekly export sales of soybeans ranged from 40.4 to 58.8 million bushels. Total export sales were reported at 24.7 million bushels with 22.6 million scheduled for ‘11/‘12. This was well above the 2.8 million bushels needed this week to stay on pace with USDA’s export demand projection of 1.315 billion bushels. Shipments of 20.9 million bushels were well above the 13.8 million bushels needed this week. This report is viewed as bullish.

Pre-report estimates for wheat exports ranged from 14.7 to 29.4 million bushels. Total export sales were reported at 26.1 million bushels with 11.8 million bushels scheduled for the current year. This was above the 3.6 million bushels needed this week to stay on pace with USDA’s demand projection of 1.025 billion bushels. Weekly shipments of 24.9 million bushels were below the 33.9 million bushels needed this week. This report is viewed as bearish.

Market Strategy
The U.S. wheat harvest is expected to begin at least two to three weeks early this year paving the way for the likelihood that more acres will go to double crop soybeans, possibly increasing 2012 U.S. soybean acreage by another 2 million acres (+ or -). Even so, old crop and new crop soybean supplies will remain at tight levels.

The commodity markets continue to grind along as the 2012 growing season gets well underway. The recent sell-off created buying opportunities for commercial and non-commercial traders in the near term. China was rumored to have made large purchases of U.S. corn and soybeans this week coming on the back of slightly bearish corn and bullish soybean sales for the week ending May 13. For the moment this was fundamentally price supportive.

The equities markets are experiencing a backlash from the EU with major resistance getting in the way of needed financial reforms. It remains to be seen whether the Euro remains intact. World equity and commodity markets will be impacted by the outcome. The U.S. dollar has strengthened every day for the past two weeks as a result of the ongoing uncertainty in the European Union.

The new crop corn price has recovered about 20 cents per bushel from the low of last week’s sell-off. New crop SRW wheat has rebounded about 40 cents per bushel. New crop soybeans are only showing a single digit gain. Uncertainty abounds. Currently, Dec ‘12 corn futures are trading at $5.28; Nov ‘12 soybeans at $13.09; and July SRW wheat at $6.41 per bushel.

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

Grain Marketing Highlights – May 11, 2012

Friday, May 11th, 2012

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

U.S. Supply/Demand Summary

U.S. Highlights

•U.S. ending stocks of corn were increased 50 million bushels from the April estimate due to lower feed usage. The increase was not expected.

•Corn ending stocks for the ‘12/’13 marketing year were estimated at 1.881 billion bushels, nearly 180 million bushels above average pre-report expectations.

•As a result ending stocks-to-use for the ‘12/’13 marketing year are expected to increase to 13.7%, more than double the 6.7% for the current marketing year.

•U.S. soybean ending stock estimates for the current marketing year were lowered 40 million bushels sending the stocks-to-use estimate lower, now estimated at 6.8%.

•U.S. soybean ending stocks for the next marketing year are projected at 4.4%, a record tight level.

•Wheat ending stocks were reduced 25 million bushels due to an increase in exports.

•The domestic stocks-to-use ratio for all wheat was reduced from 36.2% to 34.7% for the ‘11/‘12 marketing year.

US Supply/Demand Estimates, May 10, 2012, Million Bushels

Corn Soybeans Wheat
Crop Year 11-12 11-12 12-13 11-12 11-12 12-13 11-12 11-12 12-13
Report Date 10-Apr 10-May 10-May 10-Apr 10-May 10-May 10-Apr 10-May 10-May
Carryin 1,128 1,128 851 215 215 210 862 862 768
Production 12,358 12,358 14,790 3,056 3,056 3,205 1,999 1,999 2,245
Imports 20 20 15 15 15 15 120 120 120
Total Supply 13,506 13,506 15,656 3,286 3,286 3,430 2,982 2,982 3,133
Feed 4,600 4,550 5,450 180 180 230
Crush/Mill* 1,375 1,375 1,395 1,630 1,645 1,655 930 930 945
Ethanol Prod. 5,000 5,000 5,000
Seed/Other 30 30 30 116 116 125 79 79 73
Exports 1,700 1,700 1,900 1,290 1,315 1,505 1,000 1,025 1,150
Total Use 12,705 12,655 13,775 3,036 3,076 3,285 2,189 2,214 2,398
Carryout 801 851 1,881 250 210 145 793 768 735
Stocks/Use Rat 6.3% 6.7% 13.7% 8.2% 6.8% 4.4% 36.2% 34.7% 30.7%
Avg Price 6.2 6.08 4.6 12.25 12.35 13.00 7.30 7.25 6.10

World Supply/Demand Summary

World S&D Summary, May 10, 2012, Million Metric Tons

Corn Soybeans Wheat
Crop Year 11-12 11-12 12-13 11-12 11-12 12-13 11-12 11-12 12-13
Report Date 10-Apr 10-May 10-May 10-Apr 10-May 10-May 10-Apr 10-May 10-May
Carryin 125.02 124.43 127.56 69.12 70.1 53.24 198.72 196.74 197.03
Production 864.97 870.45 945.78 240.15 236.87 271.42 694.32 694.64 677.56
Tot. Supply 989.99 994.88 1073.34 309.27 306.97 324.66 893.04 891.38 874.59
Feed 509.03 508.48 549.54 137.89 147.64 133.7
Crush 223.3 224.11 234.22
Other 358.26 358.84 371.47 29.9 30.03 30.92 548.87 546.71 552.77
Total Use 867.29 867.32 921.01 253.2 254.14 265.14 686.76 694.35 686.47
End Carryout 122.71 127.56 152.34 55.52 53.24 58.07 206.27 197.03 188.13
Stocks/Use Rat 14.1% 14.7% 16.5% 21.9% 20.9% 21.9% 30.0% 28.4% 27.4%

World Highlights

•World corn ending stocks were increased by nearly 5 MMT resulting in an increase in stocks-to-use, now projected at 14.7% for the current marketing year.

•The initial stocks-to-use estimate of world corn for the ‘12/‘13 marketing year came was estimated at 16.5%.

•World soybean ending stocks were reduced slightly for the current marketing year and were indicated to be unchanged for the ‘12/‘13 marketing year.

•World wheat ending stocks were reduced from the April estimate with stocks-to-use revisions being made downward for the current and next marketing years.

Market Strategy
This report is viewed as bearish for corn, bullish for soybeans, and neutral for wheat. Outside market forces and weather developments will drive these markets until the release of the June 30 actual plantings report. Although preliminary, the markets will trade these estimates for the ‘12/‘13 marketing year until adjustments are made. On today’s open, Dec ‘12 corn futures are $5.10; Nov ‘12 soybeans are $13.60; and July ‘12 SRW wheat is at $5.99 per bushel.

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