Friday, June 01, 2012 at 11:59 AM
.............A new month but the same song. We entered with traders debating how much if at all will the USDA crop June 12 lower ending stocks. Demand for corn and beans were erratic with corn starting the month of May, week one, with 1.331 million metric tons old crop sold and 2.140 new crop before scaling back the next several weeks. The new crop year sales were robust, especially with old crop cancellations moved to new crop year. The traders sees old crop year sales as fading and new crop year expanding. So emphasis is on the 2012- 13 carryover for the June 12 monthly crop report. Bean saw old crop and new crop sales year exports for May over April. The last weekly export sales report had exports for the year at 100% of USDA 2011- 12 year expectations. The export season ends August 31. This means the government has to raise export projections or play a shell game and lower domestic usage to offset demand. Clearly the fear is they will lower ending stocks once again leading to a pre-report rally. We just finished funds taking their month-end profits in May, so there's risk to be added back in on a potentially bullish crop report, six trading days away, and uncertainty of weathers impact on yields. As you have been witnessing, whether his 90% of our pricing influence now. We started last week at the top of a rally on a hot dry forecast into the Memorial Day weekend that came to be and this week with a wet forecast ahead prices fell sharply. It's this time of year where you trade one weeks forecast in advance, one week at a time. Next week is setting up drier in the Midwest grain belt. It's not a consensus but if half the grain belt is going to be dry, that's a problem. The market trades problems first. If the forecast hold true and pre-crop report positioning enters, we should expect a higher close on the week for all grains next week. Technicals read like this. July corns support lies and 5.64 resistance 5.90, and 6.00. December corn support is 5.14 then 5.06 resistance 5.32 then 5.50. July bean support is 13.50 then 13.25 resistance 14.10 then 14.50. November beans support is 12.50 then 12.25 resistance 12.85 then 13.00. July wheat support is 6.30. Resistance 6.54.
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PFGBEST Research Team