Initial corn crop rating better than year-ago

June 1, 2009 07:00 PM
What Traders are Talking About:

* Corn planting progress was right in line with expectations at 93%, while soybean planting was at the low end of expectations. Planting date is much more of a concern for corn than soybeans, so Monday afternoon's update won't be a market mover. Emergence and crop ratings are what traders will shift their focus to now. Corn emergence is around three-quarters, while one-third of the soybean crop is up. USDA's first corn crop ratings show the corn crop off to a better start than year-ago. But remember, USDA's condition ratings are mostly a "look" test. And corn generally looks really good in the western Belt.

* China remains in the news for soybean demand. Sinograin, the country's state-run grain/soy division plans to sell a small tonnage of state-owned soybeans into the domestic market. This is just a rotational plan and an effort to help importers cope with rising prices. The tonnage is expected to be small -- so small it won't have an impact.

* Forecasts for this week have dried out some from what was previously expected. Rains are still likely today and into Wednesday, but they will be scattered and won't likely produce heavy amounts. That means more planting progress can be made than previously expected.

* Outside markets gave no clear price direction in overnight trade. Crude oil futures were lower, but so was the dollar. Lower crude oil is price-negative for grains/soy, while the lower dollar is price-supportive. If the outside market price pattern continues, corn, beans and wheat will have to get price direction from another source today.

* Meat prices -- both beef and pork -- were under heavy pressure Monday. That's not a good sign for cattle and hog futures as livestock traders are already concerned with meat demand and prices. Both the cattle and hog markets need a shot of strong demand news to fuel sustained strength in the cash markets.

The Long and Short of It:

Grain futures will face profit-taking pressure early. If the lower open is met with fresh buying it would confirm attitudes are extremely bullish. But grains could face multiple days of routine profit-taking and not do any serious chart damage. Unless there's a dramatic shift, attitudes remain bullish.

The pressure on meat prices Monday will add to negative attitudes in the livestock markets. Whereas grain traders are looking for reasons to buy, the opposite is the case in the livestock markets.


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