Depressed world markets and the beginning of harvest now in Europe and Russia to accompany the expanding US harvest keeps the wheat market under pressure as we have sunk into new lows for the move once again. For good measure, it is also believed that the Chinese are also looking at a very solid crop this year. It would appear that the bear holds all the cards but of course we know when everyone believes that, watch out for surprises.
While we still have exports sales tomorrow morning, it would appears that there is really not much to look at between now and the reports next Monday. Currently the average trade estimate for June 1st stocks is 598 million bushels with a range of 560 to 630. The average estimate for all wheat acreage stands at 55.82 million.
With the dip into lower lows yesterday nearby futures are sitting right on top of my downside targets between 5.67 and 5.62. There is certainly nothing that says we have to stop once we reach that zone but I would expect to see prices begin to stabilize at this point. The bear has been controlling this market now for the past two months and it would appear that we have reached the point that the blinders are on and everyone is thinking the same way. As we know, that could very well mean that no one is thinking anymore and opens the door for a potential for a surprise.
The corn market was able to bounce from the extreme lows yesterday but still finished soft. We are back under a little pressure overnight but remain in the same range that we have for the past week and half now and I suspect will continue to do the same between now and the reports on Monday.
The average trade estimate for the June 1st stocks figure stands at 3.75 billion bushels with a range of 3.6 to 3.9 billion. The average estimate for planted acreage is unchanged at 91.7 million with a range of estimates between 91 and 92.2 million.
The weekly ethanol report will be issued later this morning and should show production in 275/280 million gallon range. DDG’s continue to erode and margins have been squeezed which could begin to slow the pace of what has been the stalwart of demand this year.
While we know that there are water issues out in Northwestern Iowa/Nebraska/Minnesota, overall conditions remain ideal and the weather outlook appears very favorable as well. I guess I am not really telling you anything new in that respect and for now the bear would seem to be in the drivers seat. I expect to see sideways action into Monday.
The bean market has realistically been in a sideways pattern for the past couple weeks now and should remain that way through Monday. There is certainly much riding on these reports and with the expectation that additional old inventories will be found, the burden of proof would seem to rest with the bear.
The average trade estimate for June 1st stocks is 378 million bushels with a fairly wide range of 334 to 440. Anyway you slice it, we will have a tight inventory. The average acreage estimate stands at 82.15 million with a range of 80.5 to 84 million. The March estimate was 81.5 million.
Baring a shocker in the sales tomorrow morning, I suspect the bean market will be chopping sideways now through the weekend along with corn and wheat. As I commented initially, there is much riding on these reports next week and they should set the tone for direction for at least the next 30 days.