Carl German, Extension Crops Marketing Specialist; clgerman@udel.edu
General Commodity Market Observations
As of Monday May 23, ninety-three percent of the U.S. corn crop was planted, as compared to eighty-nine percent for the 5-year average, with seventy-one percent emerged, 11 points ahead of the average. Seventy-one percent of the nation’s corn crop was reported to be in good to excellent condition. Fifty-three percent of the soybean crop was planted, 4 points behind the average, with twenty-four percent emerged, 1 point ahead of the average. Two-thirds of the winter wheat crop was reported to be in good to excellent condition with two-thirds headed. All other wheat varieties were reported to meet or exceed crop condition expectations.
The situation in Europe is impacting the U.S. and European economies. Europe is an important destination for high dollar U.S. manufactured goods. Stagnate or contracting economic growth is negative for U.S. grain prices. This information was not likely factored into USDA’s May average farm price projections. Additionally, the weaker Euro enhances exportability of EU wheat, resulting in competition with U.S. wheat. More U.S. wheat will have to be priced into feeding rations replacing DDGs and corn.
The next look at USDA supply/demand projections is scheduled for release on June 10. Some analysts believe the USDA price projections given in the May report to be overly optimistic. Due to the rapid pace of planting this spring we may see an increase in U.S. planted acres from March 31 Planting Intentions. However, any acreage adjustments will not be made until the June 30 Planted Acreage report is issued. Barring any revisions made in demand projections, the production numbers are not likely to change much, if any, on June 10 for U.S. corn and soybeans unless USDA revises yield estimates.
The weekly export sales report, released this morning was viewed to be bullish for corn, neutral for soybeans, and bearish for wheat.
Argentina Set As Major Player in International Corn Market
Corn production in Argentina for 2010 is projected to be somewhere between 20.5 to 21.4 million metric tons depending upon the source of the estimate, sharply higher than last season’s drought reduced crop of only 12.7 MMT. Accounting for Argentine domestic use, Argentina will have roughly 13 MMT available for export. Brazil produces twice as much corn but consumes most of it domestically. Brazil is expected to have about 8 MMT available for export for the ‘10/‘11 marketing year. Argentina is the world’s second largest exporter of corn. Considering their economic problems, internal political rifts, and inflation rate of nearly 30 percent, it will be interesting to see if these projections can be met?
Marketing Strategy
Although it is not possible to out-guess Mother Nature, commodity traders and analysts are increasingly warning farmers to prepare for sharply lower prices, based upon what could happen in the event crop growing conditions remain favorable to crop development. Dec ‘10 corn futures, trading at $3.92 per bushel, about 12 to 14 cents per bushel higher than last week are possibly making a last attempt at a seasonal rally or are we just experiencing position squaring ahead of the Memorial Day weekend? Nearby crude is currently trading at $71.51 per barrel, almost $15.00 per barrel less than the recent high set two weeks ago. The Dow is currently at 10,177, off about 900 points since the situation in Greece involving much of Europe came to bear. The U.S. Dollar Index is trading at 86.63, up about 7 points since May 3rd. Nov ‘10 soybeans are trading at $9.17 per bushel. July ‘10 SRW wheat is trading at $4.70 per bushel. Maybe the best use of one’s time in the immediate future is to try and get an idea of possible weather outlooks for the current growing season. A good place to start is at http://www.cpc.ncep.noaa.gov/products/predictions/long_range/seasonal.php?lead=3.
For technical assistance on making grain marketing decisions contact Carl L. German, Extension Crops Marketing Specialist.