The grain markets have been extremely volatile, especially over the past few weeks. Below is an update from Carl German, Extension Crops Marketing Specialist, UD:
Will Greece Stay or Go?
Uncertainty in world equity markets, dry conditions
in portions of the U.S Corn Belt, needed rain in the Russian wheat
region, strengthening of the dollar, a commodity sell-off driven by
non-commercial fund trading, and tight old crop
corn and soybean supplies have kept market participants hopping this
past week. Most notable is the commodity sell-off that occurred on
Tuesday due to the EU situation that has seen the Euro decline in value
and the U.S. dollar strengthen. The matter of whether
Greece stays a part of the Euro or goes on its own is still pending?
Either way the economic problems of the EU will not be going away
anytime soon.
Crop Progress
U.S. corn planting was reported to be 96 percent
complete, 76 percent emerged, with the crop condition rated at 77
percent good to excellent. U.S. soybeans were 76 percent planted and 35
percent emerged. The U.S. winter wheat crop was reported
as 79 percent headed, with 58 percent in the good to excellent
category, and 3 percent harvested. Spring wheat was reported to be 99
percent planted, 86 percent emerged, with 74 percent in the good to
excellent category.
Overall, crop progress and condition ratings are
well ahead of the five year average(s). However, the ink was no sooner
dry on this week’s report when market analysts began expressing concerns
about portions of the corn belt needing rain
in order to maintain the current lofty 2012 crop ratings. We have
officially entered into a weather market. Decent rains occurring over
the weekend would send new crop prices tumbling while insufficient rains
would send prices soaring.
USDA Export Sales Report 05/24
Pre-report estimates called for
weekly corn export sales at 35.4 to 78.7 million bushels. Total
export sales of only 19 million bushels were reported with 6.1 million
bushels scheduled for ‘11-‘12. This was below the 13.1 million bushels
needed this week to stay on pace with USDA'S
demand projection of 1.7 billion bushels. Weekly shipments of 27.1
million bushels were below the 36.1 million bushels needed this week.
This report should be viewed as bearish.
Pre-report estimates for
weekly export sales of soybeans ranged from 25.7 to 40.4 million
bushels. Total export sales were reported at 35 million bushels with
29.4 million bushels scheduled for ‘11-‘12. This was
well above
the 1.6 million bushels needed this week to stay on pace with USDA’s
export demand projection of 1.315 billion bushels. Shipments of 14.7
million bushels were above the 13.3
million bushels needed this week. This report should be viewed as
bullish.
Pre-report estimates for
weekly wheat export sales ranged from 14.7 to 29.4 million
bushels. Total export sales were reported at 30.4 million bushels with
2.7 million bushels slated for ‘11/’12. This was above the 0.9 million
bushels needed this week to stay on pace with USDA's
demand projection of 1.025 billion bushels. Weekly shipments of 20.9
million bushels were below the 36.9 million bushels needed this week.
This report should be viewed as bearish.
Market Strategy
Commodity
prices are bidding higher in e-trade with soybeans showing double digit
gains. It could be that the markets were becoming oversold or that the
advancing dollar stabilized, if
only briefly. The Dow is currently higher on the day at 12,523. Nearby
crude is down about $20 per barrel since the first of March, now at $90
per barrel for nearby crude.
Commodity
prices can be expected to remain extremely volatile over the near term.
The weather and crop development are likely to take precedence over
outside forces in determining whether
opportunities for advancing sales are presented in the near term. Rain
was reported earlier in the week to have occurred in the Russian wheat
region. Traders will be paying close attention to rain events now
occurring across the U.S. Corn Belt. Position squaring
can be expected ahead of the three day Memorial Day holiday weekend.
Currently, Dec ’12 corn futures are trading at $5.21; Nov ’12 soybeans
at $12.71; and July ’12 SRW wheat at $6.71m per bushel. For technical
assistance on making grain marketing decisions
contact:
Carl L. German, Extension Crops Marketing Specialist, UD