Grain Marketing Highlights – June 17, 2011

Carl German, Extension Crops Marketing Specialist; clgerman@udel.edu

Are Commodity Prices Done?
New crop corn prices have fallen 60 cents per bushel, new crop soybeans nearly 40 cents, and new crop SRW wheat 62 cents per bushel since June 9. The drop in commodity prices over the past four trading sessions is cause for concern. However, it does not seem logical to assume that new crop corn and soybean prices are done rallying for the summer. So the answer to the question, “Are commodity prices done?” would likely seem to be not by a long shot, at least not for corn or soybean prices. Wheat could be the exception, with wheat harvest underway we wouldn’t expect to see a significant rally until harvest is complete, unless yield results are poor. Fundamentally, the corn and soybean markets are still bullish. So why the recent sell-off? The sell-off happened for a couple of primary reasons. First, the economic situation at home and abroad has had a negative impact upon commodity prices. The Dow has weakened considerably, oil prices have dropped and are expected to continue dropping in the near term due to ample supplies. Second, due to economic problems abroad being viewed as worse than those facing the U.S., the dollar index has recently strengthened. Both of these factors led to market longs taking profits and heading to the sidelines, waiting for a buy signal.

Another factor weighing heavily upon commodity markets this week was the Weekly Crop Progress Report, with 99 % of the nation’s corn crop reported to be planted as of June 12. Illinois, Indiana, Iowa, Minnesota, and Nebraska, the five largest corn producing states, were reported to be 99, 96, 100, 99, and 100 percent complete. The remaining issues concerning the U.S. 2011 corn crop are the growing season and the fact that a larger percentage of this year’s corn crop was planted later than normal. Therein lies the reason as to why commodity prices should not be counted out at this point in time. In Ohio, one of the states where planting was delayed the most, progress was reported to be 97 percent complete. Crop conditions are also reported as part of the weekly crop progress report. Currently, crop conditions for new crop corn and soybeans are somewhat of a mixed bag and could spell trouble if we get into a ‘weather market’ this summer.

USDA Export Sales Report 06/16
Pre-report estimates for weekly export sales of soybeans ranged from 5.5 to 16.5 million bushels. The weekly report showed total old-crop export sales of 6.6 million bushels, above the 0.7 million bushels needed this week to stay on pace with USDA’s demand projection of 1.54 billion bushels. Total shipments of 5.3 million bushels were below the 12.5 million bushels needed. This report should be considered neutral-to-bearish.

Pre-report estimates had weekly corn export sales at 33.5 to 51.2 million bushels. The weekly report showed total old-crop and new-crop export sales of 33.6 million bushels, with old-crop sales of 11.6 million bushels, below the 13.5 million bushels needed this week to stay on pace with USDA’s demand projection of 1.9 billion bushels. Total shipments of 32.3 million bushels were below the 43.6 million bushels needed this week. This report should be considered bearish.

Pre-report estimates for weekly wheat export sales ranged between 12.9 to 25.7 million bushels. The weekly report showed total export sales of 16.7 million bushels, below the 20.2 million bushels needed this week to stay on pace with USDA’s 1.05 billion bushel export demand projection. Total shipments of 23.9 million bushels were above the 20.2 million bushels needed this week. This report should be considered neutral.

Market Strategy
It is now June 16 and much of the nation’s corn and soybean crop have just recently been planted. With no room for margin of error in U.S. production this year it seems advisable to place advancing sales on hold at current price levels. Currently, Dec ‘11 corn futures are trading at $6.66; Nov ‘11 soybeans at $13.56; and July ‘11 SRW wheat at $6.97 per bushel.

For technical assistance on making grain marketing decisions contact Carl L. German, Extension Crops Marketing Specialist.

 

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