Commodities Finish The Month Stronger
May 31, 2013
Corn, beans, and wheat all closed higher to finish the month strong. The close marks a 10 ½ cent monthly gain for December corn, an 80 ¾ cents gain for November soybeans, and a 25 ½ cent monthly loss for wheat.
Export sales were strong for new crop corn and soybeans on this morning’s report with China taking the majority share in both products. The weather fears are still helping the market trend higher and soybeans have crossed above some major technical levels including the long term trendline resistance.
November Soybeans – (Red 50 Day MA, Blue 100 Day MA, Grey 200 Day MA, Green Trendline Resistance)
The preventive plant story is still the main market chatter but as we have said in previous letters we do not believe it will be a major supply disruptor at this time. What happens if we lose 3 million acres of corn? Three million acres at 92% harvest rate and a 160 national average yield is only 441 million bushels. The government currently has corn usage jumping 1.785 billion bushels from last year, mostly coming from feed. At current prices we don’t see a reason for usage to be much higher than last year especially with the cattle on feed numbers reported. A total production loss of 441 million bushels would not be astronomical by any means and this fear trade may be overdone.
There are rumors that the USDA might be planning to extend the prevent plant dates but again these are still only rumors. Producers need to carefully consider the financial impact of taking preventative planting and talk with their insurance agents. Basic prevent plant coverage only pays 60% of the guarantee and removes the possibility of receiving the harvest adjustment. If you are considering taking the prevent plant payment please call us immediately to discuss your options in detail.
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