Carl German, Extension Crops Marketing Specialist; clgerman@udel.edu
Recent Rally Poses Pricing Opportunities
Renewed noncommercial buying pushed corn contracts to solid gains Wednesday. The corn market remains in its longer-term sideways trend, though support should be solid in today’s trading. Additionally, increased risk for crop development has placed some ‘weather premium’ bidding back into corn contracts. The weekly U.S. crop condition rating for corn declined 1 point from the previous week, now at 72 percent good to excellent.
Noncommercial buying supported soybean contracts, although underlying fundamentals remain bullish in the old-crop market and neutral to bearish in the new-crop, which could provide support near-term. Weekly crop conditions were reported to increase for soybeans by 2 points from the previous week, now rated 67 percent good to excellent.
Noncommercial buying resurfaced in wheat Wednesday with contracts at all three exchanges posting double-digit gains. However, spreads continue to strengthen with basis levels collapsing, meaning commercial traders feel futures are overpriced.
USDA Export Sales Report 07/22
Pre-report estimates for weekly export sales of soybeans (combined old-crop and new-crop) ranged from 14.7 to 42.3 million bushels. The weekly report showed total export sales of 45.4 million bushels, with old-crop sales of 4.1 million bushels bringing year-to-date sales to 1.48 billion bushels, above USDA’s demand projection of 1.46 billion bushels. Total shipments of 10.1 million bushels were below the 12.8 million bushels needed this week. This report should be viewed as bullish.
Pre-report estimates had weekly corn export sales at 29.5 to 47.2 million bushels. The weekly report showed total export sales of 44.1 million bushels, with old-crop sales of 24.2 million bushels bringing year-to-date sales to 1.99 billion bushels, above USDA’s demand projection of 1.95 billion bushels. Total shipments of 37.3 million bushels were below the 51.4 million bushels needed this week. This report should be considered neutral to bullish.
Pre-report estimates for wheat exports ranged between 11 to 18.4 million bushels. The weekly report showed total export sales of 14 million bushels, below the 16.1 million bushels needed this week to reach USDA’s projected 1 billion bushels. Shipments of 20 million bushels were above the 19.9 million bushels needed this week. This report should be viewed as neutral.
Market Strategy
Reasons given by commodity analysts for recent price strength in commodity prices are many and varied. Nevertheless, the rally is posing some opportunities to either catch up on sales for the current crop year and/or to begin sales for out years – 2011 and 2012. For example, Dec ‘10 corn futures are currently trading at $3.93; Dec ‘11 corn futures at $4.27; and Dec ‘12 corn futures at $4.24 per bushel. Nov ‘10 soybean futures are trading at $9.81; Nov ‘11 at $9.88; and Nov ‘12 at $9.86 per bushel. Dec ‘10 SRW wheat futures are trading at $6.28; July ‘11 at $6.72; July ‘12 at $6.92; with July ‘13 SRW wheat futures at $7.18 per bushel.