Old Crop/New Crop Corn Spread Is Key Concern
May 30, 2012
Good Morning! Paul Georgy with early morning comments for May 30, 2012 at 5:10 am. Corn and soybean futures are mostly lower on slump in outside markets. The old crop/new crop spread in corn seems to be the key concern to traders and producers as cash truck bids are running 70 plus over the July futures. It appears a squeeze is happening as there was so much talk of this spread going to 2.00 premium July. And then liquidation hit commodities and now we have an avalanche in this spread. There is an attitude of "get me out" and month end margin clerks saying "get out or get the margin in now". The nation as a whole lost 5% in today’s good to excellent ratings. Of the top three corn states Iowa lost 5% (now 77%), Illinois lost 13% (now 66%), and Nebraska improved by 1% (now 79%). Spring wheat crop conditions were 5% better than last week at 79% G/E. No soybean conditions yet. Many traders have discounted the conditions report saying it is just a beauty contest. We will have to wait until June 12 to see if USDA adjusts yields. Two SA firms have put out estimates for Argentina’s bean crop below the 40 million tonnes number. The USDA should revise Argentine production lower at least one more time this year. Oilseed crushers in Argentina will be striking over wages today. Macro influences like the downgrade of Spain’s debt and forthcoming Greek election are not supporting confidence for commodity investments. Livestock bulls are feeling a little hopeful right now. Last week’s kill was right where it should have been after four weeks of bloated levels. In addition, weekend meat demand may have been good as wholesale pork gained $0.86 today. Boxed beef was higher on Tuesday with choice up 1.11 and select up 1.75. It is good news for the three day demand period but we cannot say it will change much. Beef production is still lined up for an increase into mid-June. Stay in touch with Allendale on twitter or subscribe to Allendale Research Center. Listening to the Allendale "Morning Coffee"
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Markets as of 5:10 AM
Jly Corn +1
Jly Beans -10 1/2
Jly Wheat -5
Jun Cattle -.30
Jun Hogs +.07
Jun S&P -11.25
Jun Dlr +.18
Jun Crude -1.18
June Gold -1.00
Here are just a few of the reports we follow and record historical data on:
Allendale Advanced Charts
Yesterdays continued pressure in the July Corn took out the 5/11/12 low of $5.72 1/4. This is the lowest the July Corn has closed since the 1/04/11 close of $5.56. If we are to expect any sort of recovery in July Corn we must see a close above the 5/21/12 pivot high of $6.44 ½ in order to negate this downtrend going forward.
Get technical analysis for corn, beans, wheat, cattle, hogs, crude and dollar markets.
Nelson Notes from the desk of Rich Nelson
Monitoring Agricultural Resources, the crop forecasting unit of the European Commission, lowered its yield estimate for wheat from 5.68 tonnes per hectare to 5.62. This brings the total production of soft wheat down to 126.5 million tonnes. This would make USDA’s current 132.0 mmt estimate too high.
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