Allendale Wrap-Up DATE \@ "M/d/yyyy" 6/1/2009
Corn: Last year, from the end of May up until the June 27 peak in December corn, a $1.72 3/4 rally was seen. That last push up was made on flooding. This morning we noted some clients had that magic $7.99 1/4 price in their head for December corn and were interested in debating the possibility of that move this year. Let’s keep in mind last year on the May supply/demand report USDA started out the year at 763 million bushel new crop ending stock. On the June report, that was dropped down to an extremely short 673 million bushels. On the June 30 planting report they somehow found 1.3 million more corn acres (in the face of tremendous flooding concerns). USDA later took those acres back out. This year in May we started out at 1.145 billion bushels in new crop ending stocks. We may see an acreage change or a yield change and drop that to 1.0 to 1.1 billion on June 12. So #1, we have more stocks. Additionally, crude oil at the start of June in 2008 was $127.76 and it peaked at $147.27. Right now we are looking at around $68, so #2, we have a sharply lower crude price.
Soybeans: Last week noted a quick study suggesting if old crop ending stocks fall from 130 to 106 million bushels on the June 12 supply/demand report it could imply an average trade during June of $11.96 and a peak of $12.37. That study was based on the July contract. That still appears to be a valid target. It was interesting to see that the market did not hesitate at all today even though the trade got confirmation of China canceling two to three cargoes of U.S. old crop beans. We noted this morning that should not be much of a bearish factor as we are still far ahead of the USDA’s target pace, even after that cancellation.
