Wheat conditions improving
Allendale suggested on Friday that the crop condition reports for winter wheat on the grand scale are likely to show improvement this next Monday when released by NASS and cannot rule out more improvement the week after. There are some major differences between two well known weather services for next week. As poor wheat fields are removed from weekly sampling for the weekly NASS reports it is likely the crop conditions could improve. Wheat Moving Average level for July wheat futures are as follows: CBOT's SRWW ='s 3600-3650 & 3800, tonights close 3544, KCBT's HRWW ='s 4140-4180 & 4330, tonights close 4052, and MGEX Spring Wheat ='s 4160-4190 & 4220, tonights close 3986.
We need to average at least 10.7 mil bu per wk for the balance of the 2005/06 mkting yr in order to meet USDA's export target of 1 bil bushels. Actual sales of 15.9 did clear the bar. The shipment pace continues to lose ground. This latest weekly data recorded 14.5 mil bu for weekly shipments when we need to ave 23.6 mil bu. Spreads: two seasonal spreads are explained in detail by Moore Research Center of Eugene, OR. The KCBT Wheat vs Chicago July wheat and the KCBT wheat vs July corn has a entry date of or very near 4/10/06 and exit at or very near 6/26/06. Both have had 14 winning years out of the last 15 placed. We have explained both in detail. The wheat-wheat and wheat corn spreads are elevated levels which have never been this high when entering either spread. We have advised both spreads need a pull back to suggest we would enter either spread. Both are correcting lower but still have to work even lower before we would advise to enter. Call for instructions. Trade Position: our short CBOT SRWW July futures obj was met Thursday and we have orders poised to sell corrective rallies in the MGEX and KCBT wheat futures, as outlined our Grain Trading Strategies page. The combination of improving wheat conditions as more poor acres are culled and improving weather and poor performing export shipments are our main fundamental reason why we are bearish. If futures are able to have at least two closes above the custom MA's explained above, then our trade stance could likely return to more of a bullish trade posture.
Preparing for Next Friday: Allendale has placed its estimates for Friday's Quarterly Grain Stocks and Planting Intentions Acreage report on our Midsession Comments page. The report is regarded as the third most important of the year.
Allendale estimates the largest 2nd quarter corn usage, at 2.871 billion bushels, since the 1998/1999 marketing year. However, March 1 stocks are the largest since 1988 when 7.636 billion in stocks were reported. 2nd quarter soybean usage of 839 million bushels is less than the five year average of 879 million bushels. This leaves the largest March 1 stocks in history! 3rd quarter wheat usage of 466 million bushels is just over the five year average of 448 million bushels.
Corn planting intentions of 80.254 million acres would be the 12th highest in history. It is the biggest one year reduction since 2001. Peak corn acres in 1976 were 84.588 million acres. Using Allendale Inc. 147.58 bushel/acre trend yield, it would imply corn production of 10.752 billion bushels versus last year's 11.112 billion bushel crop.