Corn influences soybean market
It's not all that surprising to see Friday's most recent, private, 2007 planting intention survey results at +9.5 million more acres than 2006 levels.
The estimate fell directly in between the CBOT floor trade range of estimates of 9 to 10 million more acres to be planted this spring vs last years 78.3 million. A much wider range of +8 to 13 million more is discussed but does not have the focus that the 9-10 million has. The week of March 12th was greatly impacted by shakiness in the global stock market economy which was fed by negative developments for the Sub Prime Mortgage industry which suggest a weakening economy, especially in the USA. More of these developments are expected for the week of March 19. However there remains a very obvious existing problem which will require the trade attention in 2007 and it is simply to raise a corn crop to meet the growing needs of the ethanol sector, slightly weaker feed use and export sectors. Equally important will be for world corn growers to do their best to create a better end stocks cushion rather than the present tightest on record dating back to 1980. It can be done with the right weather, as Argentina is presently experiencing or could result in huge losses and disappointment as South Africa is presently experiencing.
On Thursday the National Oceanic Atmospheric Administration released its spring weather forecast and results came in as we anticipated, no major threats to Midwest plantings according to the NOAA's forecast.
Weekly Export Sales: Weekly sales less than 800 K tonnes is worth noting. One week does not make a trend but be aware as #2 world corn exporter Argentina prepares for its record harvest, we must be attentive to the next 2-3 weeks results to see if the world demand is looking to other sources for its feed corn needs. As you will see within our "Export Demand" page, both sales and shipments amount needed on per week basis lost ground. At 29.5 mil bu sold for the week ending March 8th, they are the second smallest amount over the most recent ten weeks activity with only 2/22/07 results smaller of 12.5 mil bu.
Renewable Fuels Association: In case you have not heard, total plants operating and under construction have surpassed the 12 billion gallon level. At 2.7 gallons of ethanol per bu of corn. This capacity suggests an ultimate requirement of 4.44 billion bushels of corn. Be aware a portion of plants under construction may not be coming on line until the 2008-09 marketing year. Allendale estimates 2007-08 ethanol demand for corn at 3.3 bil bu vs USDA Outlook Conference est of 3.2 bil bu.
Corn Technicals: July futures short term trend is down, intermediate trend down and long term trend is down after breaking support on Monday, March 12. Dec corn futures short term trend is down, intermediate trend is down and long term trend remains up after testing key long term support during the E-CBOT trade Thursday into Friday.
Old Crop Corn Marketing: Our old crop remains hedged in the July futures and covered with May 270 call options. Our plan continues to monitor the cash and futures spread first and foremost, waiting for the signal which suggest it no longer pays to store corn. Our second and equally important signal is the late March-early April time period when cash corn historically reaches its peak.