The following market analysis is for the week ending April 27.
SOYBEANS — Relatively speaking, soybeans had a fairly mild week.
July beans only ranged from $7.24 1/2 to $7.49 3/4 and November beans traded from $7.51 1/2 to $7.77, albeit all in one day’s session. This just goes to show that price swings can be severe, but when the dust settled, beans were mostly sideways for the week.
Export sales for the week were impressive at 15.5 million bushels. We only need 4.7 million bushels per week to achieve the U.S. Department of Agriculture’s export projection of 1.08 billion bushels. Total export commitments for this marketing year (includes both shipped and unshipped bushels) stand at 1.03 billion bushels.
The March U.S. Census soybean crush was released at 155.9 million bushels and roughly one million more than estimates. This sets the September-March crush pace over 4 percent ahead of last year.
Soybean planting progress reports will begin shortly. Soybeans’ critical growing season won’t hit until August and pod-filling time. South America’s bean harvest has peaked. In the bigger picture, a primary job of the soybean market will be to encourage additional soybean acres next fall in South America to offset the loss of U.S. soybean acres and meet the increasing demand from the biofuel sector.
The value of the Brazilian real versus the U.S. dollar will also impact the planting decisions in South America. Currently the overall package doesn’t give much incentive for those growers to expand soybean acres.
OUTLOOK: Improved weather for corn planting soothes concerns that corn acres will be switched back to soybeans and should limit, but not prevent, losses in the market. I’ll peg the November support near $7.50 and resistance near $8. In general, beans will be led by the corn.
CORN — Trying to get a grip on which way this market really wants to go is like trying to stop the tides; sometimes you just have to go with the flow.
The wide variety of weather forecasts available most often do not agree with each other, making a degree in meteorology look more attractive every day. Coincidentally, I did take a beginners course in college and now I wish I had paid a little more attention.
Changing weather patterns dominated the trade, with July corn trading a range of $3.60 3/4 to $3.91 1/4 and December from $3.64 1/2 to $3.92 1/2 during the week. Mid-week, corn traded limit up on huge fund buying. We can posture about many factors that could influence price direction, but in the final analysis at this time of year it comes down to the latest weather forecast.
Even rain falling now could be viewed as bearish since it is adding to subsoil moisture for the coming summer heat.
In other news, export sales for the week exceeded expectations at 43.5 million bushels. This brings total export commitments for the marketing year to almost 1.8 billion bushels and nearly 29 percent ahead of last year. Total exports are projected at 2.25 billion bushels by the USDA.
Another positive for the corn market was the fact that broiler egg sets were 103.9 percent of last year, an exceptional increase which brings thoughts of additional feed demand to the balance sheet.
Corn planting progress was only 11 percent for the week ended April 22. For the week ending April 29, the trade is anticipating progress to climb to 22 to 27 percent. The average for corn planting for this week is 42 percent complete.
In the last 10 years the largest jump in a weekly corn planting report was the first full week of May 1999 when it rocketed from 21 percent to 55 percent complete.
The lag in planting progress this year, and subsequent presumptions that record yields are behind us for now, are what will limit the downside until the crop is established.
OUTLOOK: The consensus is that the crop will get in the ground and, until another weather scare hits the market, prices will find it difficult to sustain any rally. The short-term range for December corn could be seen at $3.60 to $4. Prices will continue to be at the whim of weather maps for the next few weeks.
Phyllis Nystrom is a market analyst with Country Hedging in St. Paul.