Carl German, Extension Crops Marketing Specialist; clgerman@udel.edu
Commodity Markets Grow More Bearish
New crop Dec ‘10 corn and July ‘10 SRW wheat closed below support levels at the close in yesterday’s trading. Dec corn broke $3.74, closing at $3.69 and July SRW wheat broke $4.47, closing at $4.42 per bushel. New crop Nov ‘10 soybean futures were only slightly higher on the day closing at $9.03 per bushel. Old crop ‘10 soybean futures are inverted to the new crop ‘11 futures contracts, indicating a longer term bearishness to the soybean market. The primary reasons being given for the lull in prices are: (1) planting progress/crop conditions ; (2) ample supplies in the U.S. and world for the remainder of ‘09/‘10 and building into the ‘10/‘11 marketing year; and (3) strength in the U.S. dollar. The U.S. corn crop is now 97% planted and 85% emerged with 76% reported to be in good to excellent condition. The soybean crop was reported as 74% planted and 46% emerged, for the week ending May 30. USDA’s next supply and demand projections will be released on Thursday, June 10.
Market Strategy
Soybean futures tend to make their seasonal high between now and the first of July. The time has expired when corn futures typically make their season high, ending around the first week of June. This is not to say that a summer rally isn’t possible. It is to say that the likelihood of a rally occurring isn’t very great absent a weather problem developing that hinders crop development and yield potential. Thus far, crop conditions for both crops are in line or better than the 5-year average. There is some possibility that the corn market is becoming oversold that could result in a short term rally. Weekly export inspections for corn were reported as bullish. Soybean inspections were reported to be neutral to bearish, as evidence builds of U.S. exports slowing down with the availability of a very large Southern Hemisphere crop. U.S. wheat export inspections were reported to be bearish in their final reporting week for the ‘09/‘10 marketing year. U.S. wheat exports for the ‘09/‘10 marketing year are likely to fall short of USDA’s 865 million bushel projection.
Rumors of China buying U.S. corn were true. However, Chinese corn purchases were more directed at controlling their internal corn price than need for corn. Recently, a source indicated that while China was purchasing 1 million bushels from the U.S. they were exporting 6 million (+) bushels. Currently, Dec ‘10 corn futures are trading at $3.69; Nov ‘10 soybeans at $9.07; and July SRW wheat at $4.44 per bushel. Nearby crude is trading at $72.88 per barrel; the U.S. Dollar Index at 87.00; and the Dow at 10,270.
For technical assistance on making grain marketing decisions contact Carl L. German, Extension Crops Marketing Specialist.