Carl German, Extension Crops Marketing Specialist; clgerman@udel.edu
Summer Impacts Commodity Marketing
The beginning of summer is always a delightful time of year for those of us who love the great outdoors. Simultaneously, it is often times the beginning of very uncertain and exciting times in the commodity markets. Volatility in commodity prices can rise with summer temperatures. The rise in volatility can result in catching a higher price for a portion of this year’s pre-harvest crop sales, something akin to catching a wave. This year is of no exception. Crop conditions throughout the major portion of the Corn Belt have been and continue to be nearly ideal with just a tad of trouble indicated in this week’s Weekly Crop Conditions report. U.S. corn crop conditions for the week ending June 20 were lowered 2 points in the good category, now rated 75 percent good to excellent (77 percent a week ago). U.S. soybean crop conditions were lowered 4 points in the good category to 69 percent good to excellent, compared to 73 percent a week ago. Even though the ratings were lowered, preliminary indications from private sources since the release of the report on Monday are suggesting that we could see an upswing in these ratings in next week’s report. Generally speaking, the main portion of the Corn Belt is experiencing garden growing conditions while most of the problems belie the fringes of the Corn Belt. Eventually, depending to some degree on whether demand outpaces supply for the ‘10/‘11 marketing year, these types of ratings for crop conditions will result in prices moving lower as summer and crop size progresses? We may get a better handle on the answer to that question upon release of the June 30 Planted Acreage and USDA’s July 9 Supply/Demand reports.
USDA Export Sales Report 06/24
Pre-report estimates for weekly export sales of soybeans (combined old-crop and new-crop) ranged from 7.3 to 16.5 million bushels. The weekly report showed old-crop export sales of 11.3 million bushels, above the 3.6 million bushels needed this week to stay on pace with USDA’s demand projection of 1.455 billion bushels. Total shipments of 8.8 million bushels were below the 9.9 million bushels needed this week. This report should be viewed as neutral.
Pre-report estimates had weekly corn export sales at 25.6 to 39.4 million bushels. The weekly report showed old-crop export sales of 44.2 million bushels, well above the 9.3 million bushels needed this week to stay on pace with USDA’s demand projection of 1.95 billion bushels. Total shipments of 32.2 million bushels were below the 46.5 million bushels needed this week. This report should be viewed as neutral to bullish.
Pre-report estimates for wheat exports ranged between 9.2 to 16.5 million bushels. The weekly report showed total export sales of 26.5 million bushels, well above the 14.2 million bushels needed this week to stay on pace with USDA’s projected 900 million bushels. Shipments of 21.0 million bushels were below the 17.6 million bushels needed this week. This report should be viewed as neutral to bullish.
Market Strategy
As of Friday of last week, due to the wet conditions in the Corn Belt that resulted in a slight lowering of U.S. crop conditions for corn and soybeans, the commodity markets were thought to be getting positive price signals. Outside market forces, the Dow, the dollar value, and crude oil prices also played a role. New crop corn futures prices are now 12 cents lower than last week, while new crop soybean and SRW wheat prices are within one cent per bushel of last week’s price levels. New crop soybeans did a brief stint about a dime higher than yesterday’s close on June 21. Dec ‘10 corn futures closed at $3.65 per bushel; Nov ‘10 soybeans at $9.23; and July SRW wheat at $4.62 per bushel in yesterday’s day trading. Outside market forces have turned price negative to commodity prices thus far this week. July corn needs to close over $3.85 on June 30th to post a monthly reversal higher. July soybeans need to close over $9.92, and SRW wheat over $5.12 per bushel. Private sources are suggesting that China’s decision to float their currency should support U.S. commodity prices. So that raises the question, “Is the higher reversal in commodity prices possible?” Answer: “In the summer months, anything is possible concerning commodity prices.”
For assistance on making grain marketing decisions contact Carl L. German, Extension Crops Marketing Specialist.