Corn: July corn settled down 7 cents at $6.33 and December settled down 7 ¼ cents at $5.32. Corn posted its high about 2:30AM overnight, posted its low at 11 AM and then bounced back about 6 cents through the afternoon on short covering. July corn basis remains strong as cash bidders try to pry bushels from farmers who are more worried about planting rather than merchandising. Corn is trading at 60 over in IL and 85 over in Nebraska. Interestingly, there are reports of South American corn being brought up to the East Coast end users. This South American corn is 75 cents a bushel cheaper than US corn, which is allowing the math to work for those shipping the corn up here. It has impacted the basis on the East coast have seen their basis take a nasty haircut due to this grain movement. It’s just one more reminder that we are marketing grain in a world market. The market awaits Friday morning’s USDA. We will get supply and demand, updating the balance sheets. The average guess is for a reduction in ending stocks and an increase in ethanol production. World supply is expected to reflect an increase in corn carryover. New crop corn has support at $5.17 and then $5.11. Old crop has support at the 11 month low down at 6.10 which we posted on April 24th, just 10 trading days ago. Hedgers: You should have puts in place for unpriced grain. If you are looking to re-own previously sold bushels, consider a June 6.50 call for 7 cents a bushel. It gives you just 15 days of time, but could pay off well if we have a bullish surprise on Friday’s USDA.
Wheat: July wheat settled down 3 cents at $7.06. Wheat traded lock step with corn as it continued to search for some independent strength. For now, wheat seems destined to remain the natural, go-to commodity short for the funds. The freeze damage reports are behind us; the wheat tour is behind us; yet July wheat is just 41 cents above its 17- month low tick down at 6.64 ¾. KC still has resistance at $8.00 and support at $7.50. Chicago WN has support here at $7.00 and resistance at $7.50. The break out from that range will set the tone will set the tone for wheat for the next 6 to 8 weeks. Until we get that move, it will continue to be a tug of war of opinions. Are you willing to manage your business risk on a coin flip? Just because this market is oversold doesn’t mean it can’t get even more over sold. Top Third clients remain 20% sold of guaranteed bushels. The rest should be protected with puts. If you are looking to re-own previously sold bushels, consider June 7.30 calls for 5 cents a bushel. They have just 15 days of time, but could pay off well if Friday’s USDA gives us a spike higher.
Soybeans: July beans settled up 8 ½ cents at $13.90 3/4. New crop SX settled down ¼ cent at $12.14 ¼. Beans swung through another 25 trading day kept day traders chasing the markets as we even up before the USDA on Friday. Soybeans in Iowa traded at $1.30 over July as bio diesel plants as the end users beat the bushels looking for beans to crush. Friday we will get our first look at balance sheets for 2013/14 crop. The trade is anticipating a larger crush and a tighter old crop supply picture. All the guessing will be meaningless at 11AM on Friday after the USDA pulls the rip-cord. Weather forecasts remain friendly for corn, which means we could hear less and less talk of corn acres going to bean acres. Technically, SN is mired in a trading range bounded by $14.50 resistance and $13.40 support. November has support at $11.90 and resistance at $12.50. Again, the story comes down to 1) weather, 2) acres planted, and 3) speculative money flow. Hedgers: Stay balanced: If you have made sales and have not yet re-owned with call options consider a June $14.20 call for 10 cents a bushel. It only has 15 days of time, but could pay off nicely with a Bullish USDA surprise.
Friday at 11AM, we get another dose of medicine from the USDA. The question is, will it be sweet or bitter? No matter if you are an end users or a producer, the report could potentially impact your pocket book if you don’t get some protection in place. More than 85% of farmers have done no cash forward sales for 2013. A lot of farmers continue to hold fast to the idea that another drought is on the way this summer. If they are right then we will have a repeat of 2012 where Mother Nature turned off the sprinklers in May, corn gained $3.00 and beans gained $5.00. If they are wrong, they will be looking up at $4.00 corn and $10.00 beans wondering what happened. That’s really the bottom line risk for producers who don’t hedge this year. However, if you are following the program, you should have had your cash sales done at much higher levels for all your grain. On your unpriced bushels, you have put protection, which gives you a floor, but leaves the door open to making much higher cash sales in the next 3 to 6 months. Finally, if you feel over sold, you can stay balanced with call options which also allow you to keep your upside open for bushels you’ve already cash forward sold. Go ahead, be bullish. That’s natural for a farmer. Just don’t be recklessly bullish. Manage the risk. Stay the course. It’s a long marketing year with a lot of weather and politics ahead of us for 2013.
CER