Old crop corn ended the day sharply lower which looks to be position squaring ahead of tomorrow’s USDA Supply and Demand report. May corn finished 9 ¼ cents lower at $6.49 while December corn finished unchanged at $5.50 ¼. May soybeans finished 3 cents lower and may wheat finished 4 ½ cents higher.
With the July-Dec corn spread dropping 11 cents today, the market is obviously a little wary of heading into the USDA report with a full dollar premium in old-crop corn over new-crop. Wheat on the other hand had a relatively strong day, retracing some of its recent losses to corn.
The Weekly Crop Progress report shows corn at 7% planted which is well ahead of the 2% - 5 year average. Illinois alone is at 17% planted compared to the 1% - 5 year average. Spring wheat is also ahead of schedule at 21% (5 year average is 5%). Winter wheat conditions improved week-over-week by 3% in the good-excellent category. Wheat is now 61% good-excellent while at this time last year it was only 36%!
Tomorrow’s Supply and Demand report will give us Old Crop carryout estimates as well as South American production. The quarterly stocks report showed a larger than expected drawdown in old crop corn stocks and will likely reduce their carryout estimates to reflect this. The average estimate for corn carryout is 721 million bushels (March USDA Est – 801 million). The average estimate for soybean carryout is 246 million bushels (March USDA Est – 275 million). The average estimate for wheat carryout is 792 million bushels (March USDA Est – 825 million).
The market is also estimating across the board reductions for corn and soybean production in both Argentina and Brazil. Last week the USDA Ag Attaché lowered their Brazilian soybean estimate to 66 million MTs (down 2.5 million). The question remains: will the updated figures in tomorrow’s report be low enough to be considered bullish?
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Crop Progress: Corn and Spring Wheat Ahead of 5-Year Averages
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