Weather and Deliveries and Funds... Oh My
Apr 29, 2011
What Traders are Talking About:
* Still some hope for a pickup in corn planting. Many private forecasters continue to call for drier (not completely dry) and warmer (not above-normal) conditions through next week across western areas of the Corn Belt. The areas of concern will be the southern and eastern Corn Belt, which could be in line for more heavy rainfall. The National Weather Service 6- to 10-day forecast for May 4-8 calls for above-normal precip over the entire northern, eastern and southern Corn Belt, with normal to below-normal precip for western and southwestern areas of the region. Most of the Corn Belt is expected to see below-normal temps during the period.
The long and short of it: If the weather warms up and dries out, the corn planting pace will pick up. After all, it can't get much slower than it currently has been. But there's a difference between planting because the clock is ticking and planting because conditions are favorable.
* First Notice Day for May grain/soy futures. Today marks the start of the delivery process for May grain/soy futures. Deliveries against May contracts totaled: 0 for corn and soybeans; 460 for Chicago wheat.
The long and short of it: The lack of deliveries against corn and soybeans is not surprising. Given tight stocks and strong demand, no one is willing to give up ownership.
* Think money flow doesn't matter? Consider this. Funds sold an estimated 40,000 contracts (200 million bu.) of corn Thursday. In the past two days, funds have sold 55,000 contracts (275 million bu.) of corn -- or about 40% of USDA's current 2010-11 carryover projection. The result: July corn futures dropped 43 1/2 cents; Dec. corn futures were down 38 1/4 cents.
The long and short of it: Fundamentals are still the number one driver of price action in the corn market, but obviously, money flow still very much matters. Keep in mind, however, the aggressive fund selling came at the end of the month. With the calendar soon set to flip to May, funds could just as quickly jump back into the long side of the market. After all, fundamentals are bullish.
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