Published on: 16:07PM Jul 09, 2010
The July USDA Supply and Demand report this morning corn has now set the stage for December 2011 contract to retest $4.50 level by the March Prospective Planting report next year to attract more corn acres to be planted next year. Continued uncertainty as to weather conditions through out the month of July and August has allowed the implication to develop that corn stocks could move well below 10% stock to use ratio. This would be the tightest since 1973 suggesting caution as a seller. Growing demand for ethanol and a strong demand base from China is helping to eat up the record corn crop. In the last 30 days, carryover has effectively moved from the 1.65 billion level down to the 1.35 billion. Fear is growing that with continued weather volatility, yields could drops below 163 bu./acre and carryover could decline to the 1.1 billion level.
As for soybeans, the market continues to disregard the increase bean acres seen on the June 30th report. Once again, soybeans continues to follow the same implication as corn regarding weather and that the focus right now is on declining crop conditions due to the excessive rains in June and potential hot and dry conditions being forecasted for early August. Carryover is currently forecasted at 360 million bushel.
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