Carl German, Extension Crops Marketing Specialist; clgerman@udel.edu
Still Some Volatility Left in Commodity Markets
August 12 will mark the release of USDA’s August Supply/Demand report. Considering the variability in ‘09 U.S. corn and soybean crop development across the country one would have to believe that anything is possible concerning the content of said report. Currently we are looking at a situation where there are no deliveries for August soybeans in the futures market, meaning a trader has to be long in order to place a sell order. The significance of that point is that the soybean market may be poised for taking another leg up before settling back. The bottom line is that ideal weather could take ‘09 new crop corn and soybean prices to new lows between now into harvest. The 6 to 10-day weather forecast in the Corn Belt has a tinge of higher temperatures (hot weather) as of this morning (7/30). There remains a chance of an early frost occurring in the Corn Belt. Both higher temperatures and/or an early frost could provide one last opportunity to make some additional pre-harvest sales for new crop corn and soybeans.
USDA Export Sales Report — July 30, 2009
Pre-report estimates had weekly corn export sales at 27.6 to 47.2 million bushels combined old-crop and new-crop sales. The weekly report showed export sales of 19.1 million bushels in old-crop corn, bringing total sales to 1.847 billion bushels above USDA’s projection for 1.8 billion bushels, while new-crop sales were 30.3 million bushels. Total shipments of 58.3 million bushels were above what was needed this week. This report should be viewed as bullish.
Pre-report estimates for soybeans ranged between 14.7 and 23.9 million bushels. The weekly report showed export sales of 9 million bushels in old-crop soybeans, making total sales for the year 1.287 billion bushels, above USDA’s revised projection for 1.26 billion bushels. New-crop sales were 26 million bushels. Total shipments of 12.6 million bushels were below what was needed this week. This report should be viewed as neutral to bullish.
Pre-report estimates for wheat exports ranged between 7.3 and 18.4 million bushels. The weekly report showed export sales of 21.1 million bushels, above the 15.9 million bushels needed to stay on pace with USDA’s revised projection of 925 million bushels. Shipments of 11.3 million bushels were below what was needed this week. This report should be viewed as neutral.
Market Strategy
If corn and soybean prices rebound in the near term then we will likely have an opportunity to get some additional pre-harvest pricing done. It will also present an opportunity to consider placing some price protection on corn and soybeans to be stored. In the event that an early frost does not occur then harvest prices for corn and soybeans are going to turn further downward as the season progresses. Commodity prices could be further impacted by outside market forces as we enter the fall. The Dow is expected by technical analysts to take an October downturn (currently trading at 9,232). Crude oil prices are also expected to slacken considerably from their current levels (now trading nearby at $64.63/barrel). In yesterday’s trading, Dec ‘09 corn futures closed at $3.28; Nov ‘09 soybean futures at $9.16; and Dec SRW wheat at $5.39 per bushel. March ‘10 corn futures closed at $3.40; Mar ‘10 soybeans at $9.21; and Mar ‘10 SRW wheat at $5.57 per bushel.
For technical assistance on making grain marketing decisions contact Carl L. German, Extension Crops Marketing Specialist.