Thursday, April 17, 2014

Corn Prices Fall from Favorable Planting Weather

By: Dustin Johnson

Wheat finished with double digit losses while old crop soybeans posted double digit gains. Favorable planting weather is forecasted for the Midwest which pushed new crop corn back below $5. Soybean strength was a continuation of yesterday’s bullish NOPA crush report. This latest crush number raised the pace well beyond previous estimates and suggests the need to import more or ration crush demand through higher prices. Wheat retraced some of yesterday’s gains but the price is still well above its major moving averages. After the grains closed it was reported that a group of pro-Russian separatists attacked a Ukrainian military base. Escalation of Ukrainian/Russian tensions has resulted in rising wheat prices so this may affect prices on the overnight open.

The EIA ethanol report released this morning showed production up 43,000 BBL per day while stocks were down 0.5 to 16 million BBL. This was a rather strong report but also not a surprising one given the strong margins. Even with strong weekly ethanol numbers final demand for ethanol is not likely to change anytime soon given the blending wall. Export and feed demand have been strong for this marketing year but we are still going to be left will between 1.3 and 1.5 billion bushels of corn carried into 2014-2015. With the potential for aggressive planting in the next few weeks we believe corn has more risk to the downside. The technicals are starting to roll over as well.

December 2014 Corn

December 2014 Corn

Tomorrow morning the USDA will release weekly export sales at 7:30am. Estimates are calling for -100k to +100k MTs of old crop beans, 175k to 350k MTs of new crop beans, 550k to 850k MTs of corn (old/new combined), 50k to 250k of old crop wheat and 225k – 375k of new crop wheat.

As a reminder markets will be closed on Friday in observance of the holiday and reopen for Sunday night trading.

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