EHedger Afternoon Grain Commentary 5/31/12
May 31, 2012
Grains finished the last day of the month on the lows. For the day July corn was down 4 ¼ cents, July soybeans down 33 ¼ cents, and July wheat down 10 cents. For the month July corn was down $1.05, July soybeans down $1.63, and July wheat down only 4 cents. That means July wheat gained $1.01 on July corn for the month!
Chart: July Corn - July Wheat
The massive swing in price between wheat and corn came days after the USDA reported a very large increase in world wheat feeding that eventually led them to reduce overall world wheat carryout. On top of that we had the "managed money" funds coming into May 8th with a net short position of 46,187 Chicago wheat contracts. As of May 22nd they had turned their ultra-short wheat position to a net long position of 7,026 contracts! This massive move by the funds is obviously a large part of the support in wheat on top of the shift in world supply on the May 12th Supply and Demand report.
New crop soybeans fell sharply on favorable rains moving their way through the Midwest. The price made it all the way down to the 200 day moving average before finding support.
Chart: November Soybeans (Grey Line is 200 day moving average)
Corn and beans had another day of heavy bear-spreading as the Rogers fund concluded its roll moving out of the front month grain contracts. Crude oil also fell to new lows for the move putting added downside pressure on grains.
Tomorrow we will have export sales at 7:30 am. The estimates are as follows:
Corn: 450,000 – 650,000 MTs
Soybeans: 450,000 – 700,000 MTs
Wheat: 350,000 – 500,000 MTs
Crop progress shows the corn rating at 73% which is down 4% from last week. Corn also came in at 92% emerged compared to the 5 year average of 69%. Soybeans are now 89% planted and 61% emerged which is well ahead of schedule. Wheat dropped another 4% in the good – excellent categories and is at 9% harvested.
For now we want to continue to watch the weather forecast for any changes. If you would like a free trial of the EHedger research please click on the link below. To discuss opening a futures/options account please contact EHedger at 866-433-4371. Thanks have a great weekend!
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