Corn and soybeans closed lower while wheat held support. For the week May corn finished 9 ¼ cents higher, soybeans 14 ½ cents higher, and wheat 6 ¾ cents higher. USDA report will be on Thursday the 28th, no change to our current market outlook.
We wrapped up the volatile week with neutral Informa estimates and a slightly bullish Cattle on Feed report (for cattle not corn). Informa is projecting corn acres at 97.8 million, soybeans at 78.5 million, wheat at 56.1 million, and cotton at 10.4 million. The combined corn and soybean acre estimate is 2.3 million acres more than the current USDA estimate which we believe is in-line with where it should be.
Cattle-on-Feed was released at 2:00pm today and showed far less placed than expected. The market was expecting 91% and the report showed 86%. Typically this situation would be negative for corn price but over the last 3 weeks it has been more about large players getting a position in place before the report than it has been about demand changes. Corn open interest has jumped substantially in the last 7 trading days. The COT report shows that the "managed money" has increased their net long position by 57,864 contracts of corn and that’s only through Tuesday! All the while we have seen a lot of feed demand switch to wheat and dismal corn exports. We were just in a long term negative trend for corn and if we don’t see a supportive corn stocks number to keep the rally going I would be worried about further setbacks.
The average stocks estimate for corn is 4.995 compared to 6.023 last year, wheat 1.165 compared to 1.119 last year, and soybeans 0.948 compared to 1.374 last year.
No major changes to our market opinion which is wide-rangebound moves in old crop corn and soybeans and a long-term negative bias for new crop pricing based on overcompensated uncertainty risk premium.
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