Corn trade works lower

(Agri-View) – Corn trade traded lower on the week due to a good planting progress number on Monday and follow through from the WASDE report the prior Friday.

For the week, July corn was 24 cents lower and December corn was 12 lower.

This past Friday the USDA released the monthly World Agricultural Supply and Demand Estimates providing the first new crop numbers.

The old crop carryover was around 150 million less than expected at 1.146 billion bushels; exports were raised to 1.9 billion from 1.75 billion last month providing the lower than expected carryover.

The new crop carryover was higher than expected coming in at more than 1.7 billion. The world numbers were bearish with new crop ending stocks at 181.73 million metric tons versus the average trade guess of 159.5.

Old crop ending stocks were 168.42 million tons versus the average trade guess of 158. The 10 million ton increase was due to increases in the beginning stocks and a 5 million ton increase in production.

Brazil production was increased 3 million tons to 75. The China saw a 2 million ton increase in beginning old crop stocks and a 5 million ton increase in their carryover.

Bottom line is we need to grow the crop, but production expectations were larger than expected, probably due to the firmer 2014 market to-date.

The weekly progress report listed corn at 59 percent planted versus the 58 percent average; this was the first report near normal progress. Emergence remains behind normal at 18 percent, and staying behind normal this week.

Had planting progress and emergence been higher, the market would have been up this week because of the below freezing temperatures in northern growing states.

The weekly EIA report showed ethanol production up 3.13 percent and stocks up only 0.95 percent, with an increase in overall gas demand. These numbers have helped ethanol prices stabilize; futures are probably now in the upper part of a trading range that should be in the $1.90 to $2.30 range.

The weekly export sales were poor at 343,000 metric tons of old crop and 37,300 of new crop. The sales numbers may help push the current negative chart momentum even further into the weekend. On the July chart we have resistance is the 10- and 20-day moving averages clustered at $5.07 with support at the 200-day moving average at $4.73. Hedgers, call us to discuss your individual situation.

Soybeans chop around the recent range

Soybean trade continues to actively chop around, eventually moving lower on the week. For the week, July was 22 lower, and November was 5 lower. The old crop spread trade has stayed fairly firm with the July-November trade 20 off the lows.

The weekly export sales were 73,400 of old crop and 324,700 of new. The weekly export inspections were okay at 239,955 metric tons; the export news is not impressive. South American shipments are expected to be arriving in the southern U.S. soon with up to 44 million bushels booked for import, the question the market is answering is whether or not this is enough to ease the old crop supply tightness.

Weekly progress listed soybean plantings at 20 percent, 1 percent behind average. Soybeans are in position to buy the addition acres indicated by the planting intentions survey, and the weather will play a role in another 10 days to 2 weeks.

On the monthly USDA supply and demand numbers the old crop soybean carryover was tighter than expected at 130 million bushels, but the new crop carryover was larger than expected at 330 million bushels. Old crop world ending stocks were also tighter than expected but still comfortable at 67 million tons, but new crop was 2 million more than expected at an extremely large 82 million metric tons.

This is 12 million greater than the previous record. So the old crop prices have bullish life, but new crop is all but in the stomach of the bears. Without weather disruption it is hard to put forth a bullish argument here for new crop, especially in light of our strength so far in 2014.

That ends up encouraging additional planted area, which is behind the larger new crop global carryover projection. A 45.2 yield was used on the record 80.5 million acre harvested on our domestic balance sheet, so that may be the highest yield number we see if plantings end up being late.

On the chart, July soybeans are just below the 20-day moving average at $14.76; we have been flirting below the 20-day this week, so the market is playing with changing our trend. It feels like the bull move has run out of steam here. Hedgers call with any questions.

Wheat trade breaks sharply lower

Wheat trade has seen selling pressure this week with cooler temperatures, some rain and long profit taking. The weekly net changes on the July contracts were 48 cents lower in Chicago, 62 lower in KC and Minneapolis was 60 lower.

The USDA weekly winter wheat crop ratings were 1 percent worse at 30 percent good to excellent and with poor to very poor at 42 percent. The crop was 44 percent headed versus 46 percent on average and spring wheat is 34 percent planted, which remains behind normal.

Weather concerns remain in western wheat areas with temperatures getting near freezing with heading winter wheat. So the downside momentum should stall. Black Sea wheat weather has improved but political concerns remain. The weekly export sales were very low at 54,900 tons of old crop and 197,100 tons of new crop. So it appears world buyers are looking at good new crop global supplies and buyers are backing away due to the board strength and upcoming new crop northern hemisphere supplies.

On the chart, wheat has turned lower with Chicago trading below the 10- and 20-day moving averages at $7.07, while KC is just below the 20-day at $8.01.

On the monthly report this past Friday the old crop carryover was 583 million bushels and new crop at 540 million versus the 555 million expected. The numbers were interesting because production was low at 1.963 billion bushels versus the 2.04 billion expected, but the USDA lowered total 2014-2015 usage by more than 250 million bushels versus 2013-2014.

The world wheat new crop carryover was listed at 187.4 million metric tonnes versus the average trade guess of 184.5 million. Hedgers call with questions.