Carl German, Extension Crops Marketing Specialist; clgerman@udel.edu
Markets Await August Supply/Demand Report
Late-summer patterns for the U.S. 2010 corn crop, which was planted at a brisk pace to start the growing season, are largely favorable to finish pollination and move through the dough and dent stages, according to Bryce Anderson, DTN Meteorologist. Key Corn Belt states have generally beneficial growing conditions to finish out the 2010 U.S. corn crop. This means promising corn yields to surpass USDA’s projected yield of 163.5 bushels per acre, leading the market weather impact to be mostly bearish. Additionally, initial indications concerning the U.S. soybean crop are suggesting a new record or near record yield, although is still too early in the soybean growing season to know. Weather is just one of many factors impacting the market. However, as of July 19, almost two-thirds of the U.S. corn crop reached the silk stage, more than double the pace of 2009 and 18 percentage points ahead of average.
The only issue for corn moving into the final few weeks of the season may be high nighttime temperatures. For example, an area from southern Iowa through Missouri and east across most of Illinois, through the Ohio Valley, had nighttime low temperatures in the July 18 to 24 period from 70 to 75 degrees Fahrenheit. Such warm temperatures can take away from the crop’s performance.
“High nighttime temperatures can hurt corn yield potential by causing the plant to speed up its rate of respiration,” according to University of Missouri extension agronomist Wayne Flanery. “With the higher nighttime temperatures, the corn plant uses up some of its energy at night, rather than put that energy into the kernels.” Ideal temperatures for corn at night are around 64°F.
USDA Export Sales Report 07/29 (week ending 7/22/10)
Pre-report estimates had weekly corn export sales (combined old-crop and new-crop) at 31.5 to 39.4 million bushels. The weekly report showed old-crop export sales of 17.0 million bushels and new-crop sales of 20.8 million bushels. Total shipments of 47.2 million bushels were below the 53.8 million bushels needed this week to stay on pace with USDA’s demand projection of 1.95 billion bushels. This report should be viewed as neutral to bearish.
Pre-report estimates for weekly export sales of soybeans (combined old-crop and new-crop) ranged from 33.1 to 38.6 million bushels. The weekly report showed old-crop export sales of 12.5 million bushels and new-crop sales of 42.0 million bushels. Total shipments of 6.6 million bushels were below the 13.2 million bushels needed this week to stay on pace with USDA’s demand projection of 1.46 billion bushels. This report should be viewed as neutral.
Pre-report estimates for wheat export sales ranged from 11.0 to 14.7 million bushels. The weekly report showed total export sales of 33.8 million bushels, above the 16.1 million bushels needed this week to stay on pace with USDA’s demand projection of 1.0 billion bushels. Shipments of 16.6 million bushels were below the 19.9 million bushels needed this week. This report should be viewed as neutral to bearish.
Market Strategy
The chances for some temperature stress, along with areas of crop stress internationally, may be enough to prevent a free-fall in corn prices for now. With the domestic (corn) ending stocks-to-use ratio near 10.3 percent, the tightest level since the ‘03/‘04 marketing year, there remains little margin for error providing record-setting demand estimates prove true. It is also possible that global corn production could cut into an already tight world stocks-to-use ratio, according to private sources. Currently, Dec ’10 corn futures are trading at $3.98; Dec ‘11 corn futures at $4.28; Nov ‘10 soybean futures at $9.87; Nov ‘11 soybeans at $9.90; with Dec ‘10 SRW wheat futures at $6.55; and July ‘11 at $6.88 per bushel.
For technical assistance on making grain marketing decisions contact Carl L. German, Extension Crops Marketing Specialist.