Exports remain strong
Corn Fundamentals: The most immediate perception on the CBOT trade floor is the harvest in the south is coming up with 5-15 bu per acre more than farmers were planning on.
Harvest in the south is going from field to the Mississippi River because of non-typical more acres planted and lack of storage for corn. This is causing an unusual large jump in barge freight of 175-200 points with levels now surpassing 800% of benchmark tariff. The demand for freight is immediate and in the south which could place basis pressure on corn points north of the harvest. If you can't secure the freight, River Houses are likely to price themselves out of the market. The immediate availability of corn in the south and the rate of flow is much larger than expected, Gulf basis dropped an unheard of 10 cents from Thursday to Friday. Reality is corn futures are still attached to the wheat futures. If wheat futures dive, expect corn futures to come under pressure even though demand for corn is very strong. World end stocks for 2007-08 are 102 million tonnes or the third smallest on record dating back to 1980. World end stocks to use are projected at 11.9% which is a record dating back to 1980.
Exports: Foreign buyers have a great short term memory. With sales running 259% higher than year ago levels (382 mil bu vs 106 mil bu), they would rather avoid a contra seasonal rally as they were caught in last fall, waiting for harvest pressure to help set low to buy their greatest amount of needs.
Shipments: With two weeks to report for the 2006-07 marketing year, shipments have reached 2.026 bil bu of a target of 2.1 bil bu or 74 mil bu balance. Shipments the most recent 5 weeks have been in a range of 29 to 45 mil bu per week. We need to ave 37 mil bu which is achievable.
Price Projection: Similar to wheat, seasonals are running about 30 to 45 days advanced when looking at our Dec corn futures price projections within our website. Our seasonal bottom objective has been met and projections now suggest a recovery to the 3800 level before Dec futures expire.
New Crop Marketing: Based on our most recent price projections, Dec corn futures corrected and estimated bottom near the 3200-3300 level. With the recent low of 3244 made on 7/23/07 Dec corn has met our downside objective. Before Dec corn expiration futures are expected to work back towards 3800 level, Thursday high of 3720 may have met the target. In order to switch trader attitude from neutral to bullish, Dec futures must clear 3746 at least twice consecutively on a closing basis. End users and producers, use the preceding information for your individual marketing needs.
Old Crop Marketing: The Sept-Dec corn spread closed at 17 cents carry. With the Midwest cash price of $3.24 per bushel, the cost to carry inventory is 3.4 cents per bu per month or 10.2 cents for the time frame. The futures market is paying you to store but the biggest problem could be to find adequate storage for the 2007 crop. The longer you hold, the odds could increase for subjecting inventory to weakening basis for old crop.