The focus remains on weather forecasts for the greater Midwest, the east Corn Belt needs rain, the west does not, especially the Red River Valley region. If Friday's NWS 6-10 day weather forecast were the only fundamental traded on Monday's open, futures would likely be lower. However we are dealing with weather forecast between June 1 through Sept which are extremely difficult to predict day by day, hour by hour.
As you can see within this weeks volatility, markets change as frequently as the weather does. Of course, the USDA will add to volatility with the release of its June crop production and world agriculture supply and demand report. Of key importance will be projected end stocks for old and new crop.
Conditions to Projected Yield: Allendale research suggest based on the most recent crop condition report the representative corn yield is estimated at 150.8 bushels per acre. This suggest corn production of 12.397 bil bu collected from 90.45 million acres planted. The condition yield compares to Allendale's projected yield of 149.79 bu per acre with production estimated at 12.314 billion bushels. These production estimates compare to USDA's May crop production estimate of 12.460 billion bushels and using its 150.3 bpa.
One Question: a subscriber to the Allendale Advisory Report ask "is there a correlation between crop conditions improvement or erosion of good to excellent conditions between monthly USDA report releases and USDA crop production estimates?" Allendale has researched this questions and can advise, no there is not a healthy correlation between conditions and production between the monthly USDA crop production reports.
There have been incidents where crop conditions have eroded for successive weeks from one months report to the next and have crop productions estimates remain unchanged and in cases actually increase. We do not place a great deal of faith into comparing weekly condition reports from USDA and what USDA actually releases for crop production the following month. We do appreciate the question and hope others will be able to benefit from the question and answer.
Observation: Thursday morning was the last remaining week of reporting for the 2006-07 wheat crop sales. The wheat which is donated report is incomplete. With the partial data available, the worst case scenario suggest 33.5 mil bu of 2006-07 crop will need to be carried into the 2007-08 marketing year. USDA may not be willing to increase export potential for soybeans even though only 14.98 million bushels of soybeans need to be sold over a span of the next 14 weeks before the marketing year comes to a close. Provided the present pace of corn sales for 2006-07, USDA corn export target could reach 2.274 bil bu, better than its present target of 2 billion bu. 2007-08 corn sales are running 5.52 times better than yr earlier levels. New crop soybean sales are running 1.53 times stronger than year earlier levels.
Trade Posture: short term we are willing to trade the technical trade range for corn as its transitions away from planting progress talk to weather related early growth talk, 3-5 day forecast and technical trade. Demand remains good for corn with the exception of corn used for ethanol. Technically we remain neutral to futures until they breaks out of its present range of trade of 3650 to 3964. We are neutral to new crop futures until Dec futures can break out of its trade range of 3630-3920. At present we remain short Dec futures and on Wednesday reached our objective for our short July corn futures position. Please see our Grain Trading Strategies page for complete details.