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Standard Grain

RSS By: Joe Vaclavik

Joseph Vaclavik is the president at Standard Grain in Chicago. Standard Grain provides futures and options brokerage to farms, feedlots, elevators, processors, end-users and traders. Visit www.standardgrain.com for more information.

 

Weekend Rains Aid Dry Conditions

Apr 16, 2012

 

·         Grains sharply lower overnight on weekend rains that blanketed a good portion of corn/soy/wheat areas, aiding producers who have dealt with dry conditions for several weeks
·         New crop corn closing in on late March lows at 5.23 as the crop is off to its best start in several years; Despite very tight old crop stocks, a large crop this year paired with an early harvest has longs running for the door
·         Crop progress to be issued this afternoon; Many traders expect the report to show corn planting at 20-25% complete vs. 7% last year and 10% on average; Fastest pace on record for this date was 19% in 2010
·         Outside markets a negative this morning; Many discussing slowing China economy; US$ higher with crude and some outside commodities lower
·         Some forecasters looking for a frost this coming weekend in the northern/eastern portions of the Corn Belt; Lows in the low 30s expected, not likely damaging
·         NOPA Crush out today at 7:30am CST; Analysts looking for 141.5mil/bu crushed vs. 136.4/Feb and 134.4/March; Export Inspections this morning at 10am CST; Crop Progress this afternoon at 3pm CST
 
The corn and wheat markets may have a tough time catching a bid to start the week. Weekend rains aided dry conditions across the Corn Belt and aided the winter wheat crop. It looks as if corn planting with be completed without any major issue during the next several weeks. Despite admittedly tight (maybe far tighter than the USDA would like to admit) corn stocks, weather will be king from now until fall harvest. The government essentially told us on their April report that they’ll be using early harvested to new crop corn to alleviate balance sheet issues in late August and into September. Basis levels and old/new corn spreads may continue to perform well, however flat prices certainly have the potential to fall further. 
Nearby soybean continue to hold together well while the November contracts slips, trading 40+ cents removed from recent highs. The new crop soybean story is a little bit more difficult to understand. Most expect the USDA to increase soybean acreage at some point, most likely in the June 29th planted acreage report. Still, many uncertainties remain regarding both the South American crop and export demand. 
 
As always, call the office with questions or concerns.
 
Regards,
Joe Vaclavik
(312) 462-4438
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