At the risk of sounding like a broken record, as we flip the calendar to July, it is clear the corn market is trading purely based on weather. Starting a week ago the weather forecasts turned more favorable, showing more rain for dry parts of the corn belt, initiating the sell off. On Thursday the USDA released the Planted Acreage and Quarterly Stocks reports. Both reports provided the unexpected, an outcome we should always expect from a USDA report but never do. Corn acreage was reported at 94.1 million, 7% higher versus a year ago and higher than the pre-report guesses. Stocks as of June 1 came in at 4.72 billion bushels, also higher than the high guess. These figures weighed heavily on futures for the balance of the week. Further pressuring the corn market is forecast for heavy rains over much of Iowa and Illinois, areas in need of moisture, through the long weekend. As is generally the case, the July 4th holiday is again a pivotal time for corn.
Soybeans had a choppy week prior to the USDA data dump. Thursday’s report showed an increase in soy acres to 83.7 million, about as expected. Stocks were reported at 870 million, just above the average guess. Logic would say beans should have traded lower, but instead, the soy complex took a jump higher, gaining $0.30+ on the day.
Beyond the printed numbers, we still have to produce the crop. Any production hiccups, or overstated acreage, will dramatically affect the overall S&D balance sheet going forward, leading to either a recovery or more dramatic sell-off. However, for the time being we will continue to trade the numbers as printed on Thursday.
Given the variability of price movement, now is the time to have pricing orders in place with the grain department to avoid missing an opportunity while we all start to focus on better weather and spring planting season.
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CHS – Rochester Grain Team
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