It's Report Day!
Jun 10, 2010
Well it’s report day. We have all the details on our Web site and overall it was neutral to wheat and beans but bullish to corn. In regards to corn, USDA surprised the trade by pushing up China’s imports sharply to put exports at 2 billion bushels.
The big push however was in regards to ethanol demand, which increase usage to 4.7 with prospects of it increasing further if the EPA confirms that blends levels are going to be increased. Overall, one has to say that the USDA did everything thing it could to report positive demand growth potential. Maybe there is a lot of pressure in Washington to report that things are improving. While the demand side was positive no adjustments were made on the supply side of the equation. Even with near record crop conditions ratings, the USDA left the crop yield at 163.5 bu. per acre. In addition, while not a top for today’s report concern will start to surfaces later this month that increased corn and bean plantings will be posted due to the very early start for most of the Corn Belt.
SUMMARY: The USDA pushed the demand side very hard today but did not reflect any of the anticipated adjustments in supply. Early calls were for 10cents high, which were seen on the open, but the market quickly faded. It is our bias the first level of resistance will be at $3.68 to $3.72 for December corn. A move back to the $3.92 to $4.05 level, which is what all the producers are wanting, is going to take some significant dry weather activity in most of the Corn Belt in July. While everybody is worried about moving from the El Nino to the La Nina and potentially dry condition nobody is willing to put their neck on the line and say when it’s exactly going to happen. Right now, the trade realizes if most of the Corn Belt can get a solid 1inch of rain every 10 days in July through early August a bin buster is coming down the pike.
RECOMMENDATION: If you have old crop corn, beans, and wheat any 5 to 8 day rally is about all you are going to get as we move into the end of the month. I would not want to have significant amounts of unpriced old crop inventory being held much beyond the first week of July unless a massive change in weather patterns develop. This is the bounce you have been waiting for, if you don’t move the product now it’s going to be next April to May before we see any solid selling opportunities develop.
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