Home / Crops / Corn / Outlook from the CBOT Floor for July 2, 2012

Outlook from the CBOT Floor for July 2, 2012

07/02/2012 @ 10:39am

Friday saw the USDA confirm massive plantings for corn and beans at the expense of wheat. No real shock there but what needs to be discussed is the 500K increase in corn acreage but a decrease of 200K in harvested. That one flew a bit under the radar on Friday and is still under the radar for some reason. We can plant everything we want, if it is not harvested it really doesn’t matter if this is the highest acreage since 1937. Wheat acreage offers HRW and SRW a mild boost and this was supported by world wheat markets following the CME move higher. A loss of 600K in acreage could change again if producers in drought areas till under double crop beans that never germinated or give up on corn in those same areas.

Stocks were neutral to bearish. Beans and wheat were above the average guess while corn came in large enough to stave off immediate supply concerns. Though bean stocks came in at the higher end of expectations, bean spreads were firm while corn spreads though strong remain on the defensive. Interestingly, overnight we saw CZ-CH dramatically tighten now sitting around 7.5 after touching 6 multiple times overnight. Big move after holding the carry in recent weeks. Weakness in corn spreads could be attributed to the crop in Ethanol bids across central states. Multiple facilities are slowing down or shutting down for “maintenance”. Whatever the reason, corn basis remains weak to start this week while bean basis remains flat to slightly supported in the west.

Over the weekend there were rains in central IL, IN and OH but these were far too minimal to help. About 20% total coverage with high winds eliminating some of the moisture benefit. Excessive temps, high winds and above average temps dominate the forecast with nothing seen rain wise a week plus in central states. There is more rains expected in northern plain states and into the far upper Midwest but that is it. The southwest plains could see storms a week out but confidence is relatively low. Temps will moderate in IL and IN a week out but between now and then look for average highs in the upper 90s.

Overnight saw an explosion higher based on weather and positive world sentiment following the EU summit. I understand the Euro is weaker against the USD and crude is slightly lower but taking into consideration Friday’s gains this is a minor downside consolidation. This market can now focus strictly on weather which is supportive worldwide. All commodities are trading off nightly highs but strength is trickling back in as traders approach the day session opening. Bean and meal bull spreads set the tone there. Corn spreads though weak in old/new crop scenarios, CZ is showing great strength versus CH13, CN13 and CZ13. Wheat is weaker than corn with KC stronger than CHI. This is something to note because CHI has hammered KC recently. KWU-WU is back at even value. I can’t explain nor justify this move but it’s something to remember because if the drought situation continues and double crop is a forgotten topic winter acreage will be there for SRW.

Looking to today, all markets will likely trade significantly higher with a chance to see some exaggerated upside move following mid day maps.

CancelPost Comment
MORE FROM MATT PIERCE more + No other content from this user
This container should display a .swf file. If not, you may need to upgrade your Flash player.
Ageless Iron TV: Tractors at War