Recent rains don't discount summer crop stress
Corn Fundamentals: bullish fundamentals include strong demand both domestically for feed use and for exports. Ethanol remains very much in the spotlight even if Pres Bush removes it from summer gasoline blends for the big metro cities to take care of gasoline demand. On the horizon is the potential for planting delays this weekend which is likely to prevent the USA to have a shot at trend yield. Bearish signals are big domestic stocks of corn and the lack of confidence in China willing to stay out of the corn export market. The latest 6-10 day forecast does suggest a window of opportunity to plant corn while the two week forecast supports the idea of a wide open window to get to 75% planted by May 8th.
Summer Stress: a special report from World Weather which provides our Weather Watch page of report does explain, just because we have adequate rainfall for crop germination it does not deviate from the potential for summer time stress to the greater Midwest growing region. The report sent to us does suggest a weakening La Nina may provide less intense summer heat and slightly reduced dryness. The April through June bias is for above normal precip for the major Midwest.
Export Sales: sales thus far this marketing year are 11% higher than yr ago levels. The present pace suggest a final sales level of 2.080 bil bu vs USDA present target of 1.95 bil bu. Our research suggest export sales drop off perceptibly in late June-early July. This is important to know if you are planning on holding and selling cash grain.
Ethanol Production: The Energy Information Administration finally found enough time to release its Feb prod & stocks data. At 8.5 million barrels, its 23% more than yr on yr levels. Production is down vs the previous months 8.9 mil barrels. Based on the pace of production for thus far in the marketing year, USDA needs to increase corn use for ethanol by 13 mil bu and use a new target of 1.613 bil bu. Stocks of 7.4 mil barrels is the largest on record vs the previous months 6.2 mil barrels. The largest stocks before today's release was 6.8 mil barrels as recently as May 2005.
Quarterly Corn Stocks: March 1 Quarterly corn stocks on and off farm of 6.987 bil bu suggest June 1 quarterly corn stocks could come in at 4.692 bil bu which would be 37% higher than the three yr ave and 32% higher vs the five yr ave for 3rd quarter stocks.
Dec Corn Futures: suggest a Dec futures high of 2800 near term and correction to 2200 before the summer season could take futures back up to 2800 with a maximum high of 3000 under extreme conditions. Our fall low suggest a price of 2300.
Dec Corn Five Year Ave: the most recent five yr historical ave suggest Dec corn peaks now and grinds lower into late May. A retest of the April high has been noted in early June , consolidates July through the middle of September and then slides into the fall harvest.
Five Year Ave Cash Price: the five year ave cash price for corn for the month of April $2.14, month of May $2.14 and month of July $2.03.