Corn, wheat, soybean trade will hinge on key USDA data

Grain & OIlseeds Report

Corn: Generally weaker trade was seen Monday, which was expected after seeing the analyst estimate for planted acreage at 95.313 million. That number is only a 1.9-million-acre reduction when trade has been talking a 3-million reduction for weeks. There should still be solid support in this market going into Friday, but that support level might be slightly lower than might have been expected last week.

Through the day, trade also expected to see a 1% increase in the GTE rating to show a slightly improving corn crop. Good support can still be expected this entire week even if the crop continues to improve, but after the acreage report, all focus will quickly turn to yield.

Right now the forecast looks helpful to advancing a crop that started out behind. This week the forecast calls for moderate heat to provide the GDU’s while also offering regular chances for rain. If this forecast pans out as expected, it would be easy to see corn condition ratings to improve next week as well.

Not to look past Friday’s report, it is important to keep focus this week on corn seeing a 2 or 3 million planted acre decline while the stocks report looks for 2.845 billion bushels on hand. Typically, it is the stocks report that provides the most surprise, so for our trading purposes, we only need to see if Friday’s number comes in above or below expectations. Look for a sideways range trade this week where bulls will likely buy close to 540 in case 3+ million acres are lost on Friday, while bears will sell close to 570 in case the USDA comes in under 2 million. Monday’s GTE rating came in at 65%…Ryan Ettner
 
Soybeans: The bean market bull spreaders were at it in a big way Monday. The old crop/new crop July/Nov spread picked up 18 ½ cents. The July contract settled 18 ¾ higher on the session. Old-crop beans continue to garner support due to the tight supply situation in the cash market as well as the soymeal. New crop beans were pressured by an improving weather situation. The Chinese equity market saw the worst selloff since August 2009 added to Monday’s negative tone for the new crop. Export inspections were viewed positive coming in at 7.827 million bushels.

Planting progress released after the close showed that 92% of the crop had been planted. The trade had anticipated the number to come in between 90% and 95% planted. The crop rating came in at 65% good to excellent. This was up 1% from last week.

We anticipate the market’s trade action to be choppy the rest of the week as Friday is the last trading day of the month and quarter and that will add to the market volatility. Also on Friday, the USDA will be releasing their updated acreage estimated. The average trade guess for bean acreage is 77.933 million acres. This would be up 735,000 acres from the March survey. The high end of the trades guess is 79.240 million acres while the low end is 77.100 million acres. Allendale estimated bean acres at 79.240 million acres.

The USDA will also release the June 1 quarterly grain stocks. The trade is estimating for the stocks to come in at 442 million bushels, down from year last year’s June’s report stocks estimate of 667 million bushels. Allendale is looking for quarterly stocks to be 422 million bushels. The trade range for the ending stocks is 413 million bushels on the low end and 500 million bushels on the high end. With the weather outlook improving and potentially seeing more bean acres than anticipated, Allendale has a long-term bearish view of for the new crop beans and is currently looking for a “fall low” at the $10.54 level…Jim McCormick

Wheat:

  • The wheat complex finished weaker on the day Monday due to harvest pressure and weaker outside markets. Also, yields in the southern plains are coming in better than expected so far.
  • Spring wheat good-to-excellent condition improves to 70%, which is 2% better than last week.  Winter wheat harvest is 20% complete versus the 5-year average of 37%.  Wheat should continue to find pressure as harvest pressure and better crop conditions continue to weigh on the market.
  • July Minneapolis wheat stayed quiet Monday and settled above the 50-day MA of 810’4… Alex Bassett

 

About the Author

Ryan Ettner is a registered commodities broker and grains analyst at Allendale, Inc. Steve Georgy is a Sr. Broker/Manager at Allendale, Inc. Jim McCormick is Senior Broker/Manager at Allendale, Inc. Allendale is registered with the CFTC and NFA and is a member of the NIBA. www.allendale-inc.com

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