Corn helped by wheat
The drive in wheat has been helping corn fundamentals. However bulging end stocks remain in the back of the trades mind.
Season Average Farm Price: as a result of USDA's March World Ag Supply Demand Estimates report, the new range is $1.85-$2.05, a dime better for the low end of the range than last months estimates. Export Sales: Check this out, USDA did raise corn export potential to 1.9 bil bu vs last months 1.85 bil bu. Based on the sales thus far in the marketing year, exports could reach 2132 bil bu. Actual sales of 1.326 bil bu is greater than last years 1.191 bil bu for the same week of the year and better than 2003/04's 1.315 bil bu for the same week of the year. End Stocks to Use: present domestic end stocks to use are 21.6% vs last years 19.8%. We would have to venture back to 1992 to find a larger value which was 24.9% with a stocks level of 2.113 bil bu vs the present 2.351 bil bu. Global stocks to use are 17.2% which is nearly identical to last years 17.3% and 2002's 17.4%.
Broiler Egg Set and Chicks Placed: egg set for the week ending Mar 4th, egg set is 101% of one year ago levels, with chicks placed at 99%, its third consecutive week below the 100% mark. Of all soybean meal use, poultry consume 50%.
July Corn Futures: seasonally 5 yr ave July corn futures are 2440. Late March futures on ave sell off to 2370 and then by early April have been able to rally back to 2450, before started the spring time grind lower. Dec Corn Futures: seasonally 5 yr ave July corn futures are 2500. Late March futures on ave sell off to 2450 and then by early April have been able to rally back to 2550, before started the spring time grind lower. Spreads: the spread between the May and July corn futures continue to work near 10 cents carry suggesting a ample supply of corn is large enough for the market to imply it is in no immediate need of corn in order to meet demand. This represents nearly 5 cts/bu per month to carry corn when a value of 3 cents is regarded as full carry. Spreads July KCBT Wheat vs July Corn: the spread did penetrate the psychological $2 resistance level which is now viewed as support and remains in a major up trend. Corn Technicals: this weeks, weekly close is 2260 vs last Friday's 2286 breaking a string of three consecutive higher closes. July corn futures close of 2450 did finish above all three of our short term Moving Average indicators of 2440-2440 and 2440. Hedgers/Marketing: Old crop inventory has been sold. If you have not moved old crop, the time may be appropriate to do so and cover with a July call if you have aspirations higher than Allendale price projections (2500). New crop hedges are 80% complete. Our futures and options advice has a long 250 corn call covering the hedge. Our long range price projections suggest a late winter Max high of 2600. The high of the current rally 2660.
Trade Position: we are short the July corn futures as the fundamentals of heavy stocks, bird flu and nearing spring time planting suggest todays higher close may be more of a result of technical short covering in a thinner futures trade market. Exports and wheat appear to be fundamentally supporting old crop corn. Allendale's 17th Annual Planting Intention Survey: On Wednesday of this week, Allendale's 17th annual farmer driven acreage survey estimates 2006 plantings, in millions of acres, with the acre increase or decrease vs 2005 following each category as follows; Corn 80.254 (-1.505), Soybeans 74.202 (+2.060), All Wheat 57.966 (+.737), Winter Wheat 41.418 (+.985), Durum Wheat 2.770 (+ .010), Other Spring Wheat 13.778 (-.258).