Wed 01 May 2013 07:37:45 CT
July corn is down 8 cents at 7:25 am cst. Grain markets are trading down led by Chicago wheat. Physical commodity markets are struggling with copper, crude oil, and the Dollar down but US stocks indices are probing into positive territory. Traders will keep a close eye on the FOMC statement later today. There were no May deliveries overnight taking the month-to-date total to zero.
Despite the threatening forecast for much of the western and central portions of the Corn Belt in the 1-5 day period, the corn market is attempting to shrug off the delays given the planting progress that many believe has been extensive since Monday. Planters have been active in areas NE, IA, and MO this week and with the technological improvements to planting equipment on the farmer's side, many suggest that even with a small window to work from, significant progress can be made.
A well-advertised storm system entered western and central NE overnight bringing a wintery mix plus cooler temperatures. The Omaha area will see low temperatures near 30 degrees tomorrow but the winter-like conditions will shut off by Sunday with 70 degree temps expected by next Monday. A similar forecast is expected for IA with precipitation totals backing off a bit but still near 4 inches for the central portion of the state. Accumulation will back off as the front moves east through IL with the heaviest totals over the 5 day period in the western Corn Belt, lower Midwest, southern delta, and southeast. A more favorable 6-10 day forecast was suggested late yesterday by NOAA with dry conditions in the northern plains, above average rainfall in the eastern Corn Belt and normal conditions for the Midwest.
The trade is already looking ahead to what the total US planting progress will be by next Monday's report with many suggesting it'll be a stretch to see 10-11% and some are around 25-33% by May 12th. The current pace is in line with the 1984 crop year and during that year, the May 12th report showed 26% but actual corn yields were 3.2% above trend line. If the average yield for the slowest 5 years of planting by May 12th is assumed, it's possible to see the 2013/14 yield decline by 10.6% from trend. Much of the overall yield will be determined by growing conditions during pollination but pushing pollination back in the year leaves the crop vulnerable to pollination during mid-July heat.
The May/July jumped 9 cents yesterday and the heavily traded July/December lost 7 cents as trader's exited positions ahead of first notice day and took profits. May OI lost 12,093 contracts and the July OI lost 8,151. The estimated decline in total OI was 11,131. The changes are interesting given the price decline mixed with the short-covering action from Monday. Some suggest the data may be skewed due to option expiration, month-end positioning and significant moves in the May/July and July/December calendar spreads. The two day change in OI is down 41,866 contracts.
Spot IA ethanol margins for the week ending April 26th are estimated at 36 cents per bushel, down from 39 1/2 the week prior but overall still very healthy. If all other inputs are left unchanged and this week's gains in the futures market are added with current IA basis levels, margins likely decline by another 15-20 cents per bushel. Ethanol plants remain aggressive with bids to shore up supply pipelines into May and June.
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