It was a weak day at the Chicago Board of Trade with double digit losses in old crop corn, new crop soybeans, and old/new crop wheat.
The prime reason for the corn selloff was the USDA monthly Supply and Demand report. The market was expecting the USDA to lower their forecasted 2011-2012 corn carryout to 721 million bu. To the market’s surprise the USDA didn’t change a single US corn demand number, leaving it untouched from the March report at 801 million bu. The world corn carryout fell almost 2 MMTs to 122.7 MMTs which is just above market expectations.
The US and World soybean estimates fell right in-line with market expectations. Combined soybean production between Argentina and Brazil was lowered to 111 MMTs and total world carryout is estimated at 55.52 MMTs. These estimates helped beans open up and trade to new highs for the move (May contract). Even though beans couldn’t hold that strength and ended up having a 30 cent selloff from the highs, the July – November bean spread still closed 9 ¼ cents higher.
Wheat was a little harder to figure out today as total World Carryout was a full 2 MMTs below estimates yet it had the largest selloff. The world wheat feeding estimate jumped 6.83 MMTs from the March estimate! This shows a lot of what we have been discussing about wheat being cheap to corn. Even in the US they increased wheat feeding by 35 million bu. Yesterday’s sharp increase in the winter wheat crop rating could have played a part in the selloff as well as the fact that harvest will be just around the corner.
Between now and June the market won’t have a definitive answer of just how many acres switch back to soybeans from corn. A carryout of only 250 mill bu is obviously small but we will have to continue to watch weekly sales and exports to see if they line up with the USDA’s projections. Now is still a great time to double check your 2012 hedge strategy using AMMO to see if there are any changes to be made. To receive a trial of the AMMO software, please sign up using the link below. If you would like to open a hedge account at EHedger, please contact Dustin or Dan at 866-433-4371. Have a great rest of the week!
USDA APRIL SUPPLY AND DEMAND SNAPSHOT
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