Move only enough old crop for new crop storage
Bearish corn fundamentals include export sales which are not likely to be shipped before the end of the marketing year, larger than usual end stocks, and South Korea's purchase of China corn for Oct arrival. ,
Bullish fundamentals include solid export sales, strong feed demand from more animal units and strong, growing demand for corn to be processed into ethanol and tighter than 2003-04 projected global end stocks to use. Weather for the immediate term as a result of recent National Weather Service forecast calling for warmer dryer conditions at a time when corn kernels need to be filled.
Export Sales: Sales have exceeded USDA target of 2.1 billion bu but with only four weeks remaining in the marketing year, shipments pace suggest they will not reach the target and case carry in corn stocks for 2006-07 to increase.
Ethanol: May ethanol production and stocks report (just released). At 9.09 million barrels of ethanol produced it came in just 93,000 barrels more than what was needed to keep pace with USDA 1.6 billion bushels of corn to be used for 2005/06 usage. Ethanol stocks of 7.848 million barrels is 1 mil more than yr ago levels and as predicted did follow seasonal tendencies by dropping off it April highs. The previous month stocks were a record high of 9.1 million barrels.
NWS: Forecasts are viewed as bullish for the 6-10 day forecast but a bearish to futures 8-14 day forecast. Be aware private forecasters are calling for increased rain potential for Tues-Wed of next week vs what Thursday maps had indicated.
Quarterly Corn Stocks: June 1 Quarterly corn stocks on and off farm of 4.363 bil bu suggest Sept 1 quarterly (end of 2005-06 marketing year) corn stocks could come in at 2.335 bil bu which would be 52% higher than the the five yr ave based on five year historical 4th quarter usage.
2006-07 End Stocks to Use: Projected domestic end stocks to use are 9.2% vs 2005-06 18.5%. We would have to venture back to 1995 to find a tighter amount which was 5% with a stocks level of 426 mil bu vs projected 1.077 bil bu. Projected global stocks to use is 11.4%. Since 1980 only 2003 was nearly as tight at 14.3%.
Corn Acreage Study: Those years when corn acres increased from the March intention report to the June planted acreage report by a min of 500,000 to a max of 2.5 million acres implies a dec corn futures pre harvest low of $2.42.
Dec Corn Five Year Ave: the most recent five yr historical ave suggest Dec consolidate in Aug and then sells off by 30 cents into harvest.
Corn Marketing: only move enough old crop to make room for new crop supplies as old crop basis is weak and expected to remain weak into the end of the year. Our new crop hedges were rolled to the July to pay for storage on farm and added an additional 9 cents to our storage revenue for the 2006 corn crop.
Five Year Ave Cash Price: The five year ave cash price for corn for the month of August $2.14, month of Sept $2.13, month of Oct $2.05, month of Dec $2.11.