Are the bulls taking over the bears? Are the bears locking in some profits and taking a seat on the sidelines? Corn and soybeans were able to find some support amidst the negativity in the marketplace this past week. June started off on a rocky note for both corn and beans, but eventually gained momentum as the week progressed. To end the first week of June, corn and beans were back to levels not seen for the last couple of weeks. We could credit some of this strength to short-covering as some of the shorts have been taken out of the market.
Export inspections for corn were disappointing this past week. New crop corn saw cancelations of over 6 million bushels. With this unfortunate cancelation, new crop corn has a negative export value for 15-16 at -54,800 tons. The trade was looking for a number between 100,000 and 300,000. It is possible that the USDA might be forced to adjust their current export estimates just a touch lower. New crop soybean sales came in at 347,000 tons, well above trade expectations of 50,000 to 150,000 tons.
So far, we have not experienced much of a delay in planting progress of corn and soybeans compared to the five-year average. However, this week we could see a decrease in crop condition ratings with the added talk of prevent plant or replant across parts of the US Corn Belt. With excessive rainfall again this past week in Nebraska, Missouri, and Kansas, this “talk” could turn into a reality. States that are still experiencing substantial planting delays, such as Kansas and Missouri, could definitely see a switch of acres to beans.
Besides weather, the market will turn its attention to the monthly USDA Supply and Demand report to be released on Wednesday, June 10th. Many in the trade are anticipating the US planting 86 million acres of beans. The current USDA estimate stands at 84.6 million acres of soybeans planted for 15/16. The South American crop currently looks larger than the USDA is expecting and will be updated on the 10th.
With a little bit of support from the board of trade this week, we saw an increase in farmer grain movement. Although basis still feels a little firm, one caution that we have right now is the possibility of basis weakness. This time of year producers are cleaning out their bins due to condition concerns or just preparing for harvest. Keep an eye on local basis values as we could see them fall away in the coming weeks. Also, be prepared to take advantage of the increased volatility in the markets this time of year by placing orders. Please ask yourself how much coverage you would like to have this time of year and how much catch-up needs to be done. How many sales would you like to make as we head into the summer months?