Published on: 07:21AM May 08, 2012
· Grains mostly higher overnight led by old crop corn contracts; May corn trading 6.70+ overnight as basis levels explode on supply tightness; Dec corn able to close near unch yesterday after trading sharply lower early in the day
· Soybean prices have been under pressure since last week’s key reversal on the charts; Many traders believe that significant acreage will be switched into soybean given spread action versus corn during the last several weeks
· Agronomist Cordonnier left Brazil soybean estimate unch at 65.0mmt; Also left Argentine corn and soybean estimates unch
· Rumors of China interest in both old and new crop corn from the US continue among traders
· Crop Progress released yesterday after the close; most of the planting progress numbers were above analyst estimates:
o Corn 71% planted / 53% last week / 47% avg / 32% emerged
o Soybeans 24% planted / 12% last week / 11% avg / 7% emerged
o Spring Wheat 84% planted / 74% last week / 49% avg / 47% emerged
o Winter Wheat 63% good-excellent / 64% last week
· USDA to release May Crop Production report on Thursday morning at 7:30am CST; Traders looking for new crop corn stocks near 1.714bil/bu, which would be an increase of about 130% from this year
· No major changes in weather forecasts, which have been mostly favorable for corn and soybean producers up to this point
Producers should look to add to PUT option positions in December corn on a rally to the 5.35-5.40 areas unless a weather issue is encountered. Producers shouldn’t aim to look a gift horse in the mouth; and a rally in new crop corn without a weather issue and a projected 1.7bil/bu carryout is a gift. We’re not advising to price the entire crop on a marginal rally, but we believe adding to protection is a must.
As always, call the office with questions or concerns.
Jim's Morning Markets Report--May 8
Maximum Section 179 Remains at $500,000 for Many Farmers