Selling Continues in the Overnight
May 06, 2014
Update- Significant old crop corn cancelations were reported across the news wires during the morning trade break. Cancelations of 120,000 tonnes of U.S corn to unknown destinations, and another 100,000 tonnes of U.S corn to Spain will likely pressure the corn market on the open at 8:30 CST.
Grains are red across the board this morning, with corn down 4 ½, soybeans off 15 1/4, and Chicago wheat down 3 ¼. New crop contracts are showing relative strength following yesterday’s crop progress report which showed corn, soybean, and spring wheat seeding well behind expectations for the week.
The USDA reported corn planting 29% complete, 4% below expectations for the week and 18% below the five year average. Soybean planting is off to a similar start with 5% planted, well below the 8% expected and 11% five year average. Spring wheat planting was right in line with expectations for the week with 26% planted, but below the 41% planted we have seen over the last five years. Not surprisingly, corn planting in the northern grain belt is well behind the national average with Minnesota 9% planted, Wisconsin 2% planted, and Michigan 3% planted.
The wheat complex is showing relative strength this morning as unrest in Ukraine’s largest port city and domestic wheat conditions continue to support prices. Yesterday’s crop progress reported showed 31% of the winter wheat crop now rated good to excellent, down 2% on the week. The Kansas City wheat crop remains of particular concern, with just 17% of Kansas winter reported good to excellent.
In soybeans, bull spreading is unwinding again this morning as Informa Economics estimated Brazil’s 13/14 crop to be around 87.4 million tonnes, up from its previous forecast at 86.75 million tonnes. Brazil has for the most part wrapped up harvest which puts pressure on the nearby futures month. Disappointing export inspections is also weighing on the front month for soybeans, as inspection numbers showed only 99,502 tonnes to be shipped for export this week. With a the possibility for a larger than expected crop out of Brazil and near term demand waning the front month has been showing relative weakness compared to the November contract which was supported by a slower than expected planting pace.
Corn drifted lower in the overnight session on light news. Ukraine government statistics showed month-over-month corn exports nearly cut in half during April. Traders reported this as a "normal seasonal slowdown" for the world’s third largest corn exporter and not cause for major concern. With the conflict in Ukraine spreading west into the key port of Odessa, any further violence could work to support corn and wheat futures. From a technical aspect, long term trend line support remains intact on both the July and December daily chart.