May 25, 2010 CHANGING SEASONS
Monday's first report came out at 10:00am Central Time with our weekly export inspection report putting wheat at 20.3 million bushels (m.b.) inspected by the U.S.D.A. for near-term export up from 13 m.b. the week prior; and four-week average of 15 m.b. We need 40 m.b. weekly to attract traders attention as we sit on a record 950 m.b. ending-stocks.
Bean inspections were 3.9 m.b. versus 8.9 m.b. the week prior; and four-week average of 7.2 m.b. China was in for 1 m.b. versus zero last week, but outside countries sat on their hands as we bounced off monthly low bids on prices. It is a neutral demand indicator on the week at a time when talk of record U.S. exports abound.
Corn inspections were 39.9 m.b. up from 38.9 m.b. the week prior; over a year ago of 31 m.b. and well over a strong four-week average of 32.2 m.b. Last Tuesday, China sold 800 t.m.t. of its government reserve to domestic users. On Friday, they offered another 1.580 m.m.t. from held reserves to local feeders and end-users all to satisfy feed shortages due to last season's drought and this has them re-buying this corn on U.S. ports at a cheaper price than sold to their locals. Sweet deal. They deal with demand while still on track to increase their strategic grain reserve before year's end. Expect corn demand to continue to surge and surprise the industry, all but PFG grain report readers who have been on this demand surge since our February reports wrote of its eventual uprising. After the close, our crop progress and condition reports came out at 3:00pm C.T. as they do each week. Corn progress came in at 93% planted and based on weather this week, we will be done by Sunday. Condition was 71% in good-to-excellent condition, up 3% from the week prior. The only key Midwest producer not to improve, was Indiana at 68% down 1% on the week. Fast planting pace and good condition says no problems yet. Soy beans came in at 53% plated versus the 10-year average of 58%. Last week's rains slowed us, but we will catch up by the end of this week of 75% or more.
Last week corn, beans and wheat all hit our support low prices given and rallied. July corn $0.23 off support, July wheat $0.19 off support and July beans $0.21 off support, but we are still in that grey area called the planting season where we are confined between support and resistance chart lines.
Next week things change. Markets are closed next Monday for the Memorial Day holiday. Seasonally, grain rallies after Memorial Day as the planting season is over and the growing season begins. June and July builds a weather premium in the market to reflect the uncertainty of the growing season. Being in a El Nino weather pattern this year we should expect a warmer and drier than normal summer. April was the warmest on record and one of the driest in the upper Midwest. May through today lends to a drier month and clearly one of the warmest but it is key yield time from late June through July when weather makes or breaks the yields. Strong demand and uncertain weather says this week's lows could hold through to mid-August. The wild card still remains outside market pressure influence. July corn finds support at 3.54 and resistance up at 3.88. July wheat supports at 4.60, a close under and the 5.20 to 5.30 area looms. If 4.60 holds; 5.05 is upside resistance. July bean support remains 9.30; then 9.20 with resistance at 9.45 then 9.76. WXRISK.CO the weather site says we could come in next Tuesday with rain for the first week of june. This would give us a lower open but a potentially great early june buy.