Carl German, Extension Crops Marketing Specialist; clgerman@udel.edu
Executive Summary – ‘Price Direction Hinges Upon the Weather’
With the state of the economy currently up in the air, ethanol margins are reported to be the best spot margins in a few years. This along with a mixed bag concerning weather conditions in the Corn Belt (heat is still in the forecast) is limiting downside movement in corn prices. The weekly crop progress report, issued Monday afternoon for the week ending July 24, lowered the conditions report for U.S. corn and soybeans the second week in a row. A survey conducted by private forecasters and reported on Tuesday afternoon resulted in a corn yield average estimate of 155.6 bushels per acre, down 3.1 bushels from USDA’s June 30 forecast based upon June 1 conditions. The trade will be watching the south-central belt which is dry and expected to stay hot with limited moisture over the next 10 days. Hot and dry conditions are prevailing from Kansas-Northern Texas across to central Illinois, Indiana and most of Ohio through Kentucky, down to the Northern Delta. Nebraska, Iowa and Northern Illinois, and areas North should continue to see meaningful moisture.
USDA Export Sales Report (week ending 7/21/11)
Pre-report estimates had weekly corn export sales at 21.7 to 37.4 million bushels. The weekly report showed total export sales of 19.1 million bushels, with 13 million bushels of old crop, well above the 5 million bushels needed this week to stay on pace with USDA’s demand projection of 1.875 billion bushels. Weekly shipments of 39.6 million bushels were below the 46.6 million bushels needed to stay on pace with USDA’s demand projection. This report should be viewed as neutral to bearish.
Pre-report estimates for weekly export sales of soybeans ranged from 20.2 to 31.2 million bushels. The weekly report showed total export sales of 13.7 million bushels with old-crop sales accounting for .04 million bushels. Shipments of 7.2 million bushels were below the 15.1 million bushels needed this week to stay on pace with USDA’s demand projection of 1.52 billion bushels. This report should be viewed as bearish.
Pre-report estimates for wheat ranged from 11.0 to 18.4 million bushels. The weekly report showed export sales at 17.4 million bushels, near par with the 17.3 million bushels needed this week to stay on pace with USDA’s demand projection of 1.15 billion bushels. Weekly shipments of 20.7 million bushels were slightly below the 22 million bushels needed this week. This report should be viewed as neutral to slightly bearish.
Market Strategy
Bottom line, rains were very good to excellent in the Northern tier of the Corn Belt., not so good in the South-South Central area. There is an implied logic that suggests advancing corn and soybean sales is warranted, due to the mixed bag concerning the current weather situation. In this morning’s trade, Dec ‘11 corn futures are trading at $6.87; Nov ‘11 soybeans at $13.79; Dec ‘11 SRW wheat at $7.52; with July ‘12 SRW wheat at $8.03 per bushel.
For technical assistance in making grain marketing decisions contact Carl L. German, Extension Crops Marketing Specialist.