The old crop / new crop spreads strengthened for corn and beans today on ideas that planting progress could well be a record this week and with an extended forecast that looks favorable for seeding into the end of May.
The outside markets as of 1:45 p.m., oil up 96 cents at $96.11, gold down $26.10 at $1361, U.S. dollar up .633 pts and the Dow up 69 points to an all-time high.
Informa economics released their May acreage estimates today increasing soybean acres while reducing corn and spring wheat acres.
Corn After sagging lower overnight on follow through from yesterday’s price action, the front end of the market found good buying interest on old crop / new crop spreading. Strong cash markets continue to support the nearby months. July closed up 11 ¼ cents at $6.52 ¾ and December closed down 4 ½ cents at $5.19 ½.
Informa economics reduced corn acreage by 455 thousand acres from the USDA planting intentions to 96.827 million acres. Assuming normal growing conditions this equates to a 14.5 billion bushel corn crop. The reduction is in the upper Midwest.
Planting progress could set a record this week with projections coming in as high as 72% complete on Monday’s report. That would be a 44% increase in one week. Seems possible based on reports we are hearing.
The Eastern Corn belt looks drier into next week which should allow for planting to get caught up. Many areas would like to receive some moisture.
The July/Dec spread gained 16 cents today trading at a $1.33 ½ cent inverse.
Oilseeds After trading lower early, beans found good support from ideas that any shift in acreage from corn to beans will be minimal given this week’s progress and the extended forecast. Exports and a lack of producer selling extended the gains. July closed up 21 cents at $14.48 ½ and November closed up 10 ¾ cents at $12.28 ¼.
Informa economics increased soybean acreage by 1.2 million acres from the USDA projections to 78.3 million acres. If realized it would be a record for acreage and production.
The USDA announced 138 tmt of beans sold to unknown and 120 tmt sold China. All but 18 tmt are for new crop.
Despite a slightly weaker feel to nearby basis levels, the front months continued to gain on new crop months. A lack of pipeline supplies should continue to support the spreads.
The N/X spread gained 10 ½ cents today to a $2.20 ½ cent inverse.
Wheat Wheat was under pressure all session despite the turnaround in corn and beans. Improving conditions in the U.S. HRW crop along with better chances of precip for major growing areas around the world are keeping pressure on wheat prices. July wheat closes; Chicago down 4 ½ cents at $6.83 ¼, KC down 6 ¼ at $7.37 1/4 and Mpls down ¼ cent at $8.03 ¾.
Informa economics reduced other spring wheat acres by 300 thousand acres to 12.4 million acres. Although up from last year, still lower than the March USDA planting intentions report.
Spring wheat planting progress should be approaching 70-75 percent complete on Monday’s report. Some areas could experience planting delays into early next week given the current forecast. 1 inch of precip would be welcome in most areas and not cause much of a delay.
Australian growing areas have received needed precip with increasing chances into next week.
FSU growing areas received timely precip this week. The extended forecast looks good into the end of May, which is a critical time to avert significant yield loss.
Equity markets found support today on positive economic news coming from two reports released this morning. The leading indicator index showed better than expected strength with a 0.6% month on month increase. The index was led by positive showings from the stock market and credit activities, while seeing a negative tone from the manufacturing sector. Consumer sentiment also reflected positive consumer spirits as the index level was reported at 83.7 for mid-May. This is the highest reading since November 2012.
Minneapolis Federal Reserve Bank President Narayana Kocherlakota spoke today, focusing on the Fed’s need to keep short-term interest rates low until the unemployment rate falls to 5.5%.
Canadian headline CPI for April came in at -0.2%, month on month, and 0.4% year on year. The results came in fairly close to estimates, echoing expectations for very little inflationary pressures.
As of 1:45pm, the Dow is 78.87 points higher to 15,312.10, while the S&P is 10.78 points higher to 1,661.25. Gold is down $22.70 to $1,364.20. Crude oil is $0.97 higher to $96.13/barrel. U.S. 10-year treasuries are 0.064 higher while the Euro is off 0.0078 to 1.2831.
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