Carl German, Extension Crops Marketing Specialist; clgerman@udel.edu
USDA Export Sales Report 06/17
Pre-report estimates for weekly export sales of U.S. soybeans (combined old-crop and new-crop) ranged from 12.9 million bushels 16.5 million bushels. The weekly report showed total export sales of 11.6 million bushels, with old-crop sales of -5 million bushels due to a cancellation by Japan, below the 2.3 million bushels needed this week to stay on pace with USDA’s demand projection of 1.455 billion bushels for U.S. exports. Total shipments of 7.8 million bushels were below the 9.7 million bushels needed this week. There are eleven weeks remaining in the ‘09/‘10 marketing year for soybeans. The report is viewed as bearish.
Pre-report estimates had weekly corn export sales at 27.6 million bushels to 39.4 million bushels. The weekly report showed total export sales of 47.9 million bushels, with old-crop sales of 42.9 million bushels, well above the 12.1 million bushels needed this week to stay on pace with USDA’s export demand projection of 1.95 billion bushels. Total shipments of 42.2 million bushels were below the 46.1 million bushels needed this week. With eleven weeks remaining in the ‘09/‘10 marketing year, U.S. corn export shipments are currently 5 percent behind USDA projections. This report is considered bullish.
Pre-report estimates for wheat exports ranged between 7.3 million bushels and 12.9 million bushels. The weekly report showed total export sales of 35.3 million bushels, well above the 14.6 million bushels needed this week to reach USDA’s projected 900 million bushels. Shipments of 14.5 million bushels were below the 17.5 million bushels needed this week. This report marks the second week of the ‘10/‘11 marketing year for U.S. wheat exports. This report is considered bullish.
Market Strategy
Outside market forces have been the driver behind improvement seen in commodity prices this week. Dec ‘10 corn futures closed at $3.77 per bushel in yesterday’s trading, 11 cents higher than last week. New crop Nov ‘10 soybean futures closed at $9.24, 33 cents higher than last week, buoyed by old crop prices. New crop SRW wheat closed at $4.61 per bushel, 30 cents per bushel higher than last week, buoyed by world wheat growing conditions. Nearby old crop July ‘10 corn futures closed at $3.56 per bushel, 15 cents per bushel higher than last week. Old crop July ‘10 soybean futures closed at $9.57 per bushel, 25 cents per bushel higher than last week. Can this week’s rally be sustained? Much of the answer to that question depends on mostly unknown factors. The impact that weather has on growing conditions for U.S. row crops this summer now becomes the primary factor. Thus far, USDA’s Weekly Crop Progress reports are not indicating any problems for 2010 U.S. corn and soybean production. For the week ending June 13, 77 percent of the US. corn crop and 73 percent of the soybean crop were rated in good to excellent condition. Locally, crop conditions are extremely dry.
Outside market forces were supportive of commodity prices this week. The U.S. dollar index weakened this week, now trading at 85.77 as compared to 87.18 last week. The Dow strengthened from 10,095 last week to 10,342 this morning. The nearby crude price increased from $74.38 per barrel last week to $77.20 this morning.
Generally speaking, market rallies should be rewarded with advancing sales and those lagging on making new crop sales would be encouraged to do so. However, considering local dry conditions and current basis levels: new crop corn at 5 under to 10 over; new crop soybeans 30 to 50 under; and new crop SRW wheat at 45 under; it becomes necessary to consider other alternatives for advancing sales. Among them, using put options due to the fact that one does not have to deliver bushels in the event of a production shortfall. Plus, basis will not be assigned to buying the put option until a later date. Basis can be assigned later by using a basis contract or by making the cash sale at harvest. Contracted bushels using put options would not result in having to settle on cash contracts with crop insurance payments. Only the premium cost would need to be covered. For those caught up on new crop sales, now is a good time to think about doing nothing, wait ‘n see what happens bearing in mind that the June 30 Planted Acreage report will be issued in just thirteen days. General pre-report expectations are for increased U.S. corn acres and reduced soybean acres from the March 31 Planting Intentions report.
For technical assistance on making grain marketing decisions contact Carl L. German, Extension Crops Marketing Specialist.