Monday's lower grain prices came on the back of weather reports of ample Midwest weekend rains to help emergence on early planted grain - that and a 6- to 10-day drier outlook that will get farmers off to a fast pace on planting.
Early planting progress and weather is always viewed by the trade as negative; early-in means early-out, with key yield development for corn ahead of the July heat and dryness that potentially would occurs. Note, last year, after a wet spring planting season, July brought extreme heat and dryness for late pollinating corn, which reduced yields. We had record late planting due to spring rains. They can avoid a similar problem this year if planting progresses quickly.
Monday's weekly export inspection report, a gauge of near-term demand, showed beans to be inspected and shipped near term at 18 million bushels versus 27 last week and the 4-week average of 25. Key world player China was in for 7 m.b. versus 12 last week. Bean exports have been soaring lately has China finds coverage at U.S. ports after shortfalls in South American production this year. The bean drop in exports may come from corn interest.
Rumors circled last week of China in buying corn. Weekly inspections for corn were 42 m.b. versus 26 last week and the 4-week average of 20. It could be China adding corn to balance incoming trade as their incoming seaports have limited space.
The weekly crop progress report comes out after the close today, one day delayed. Tuesday's gains came off the turnaround Tuesday effect, with the outside markets up measurably sparking short covering in grains. We expect a post-USDA crop report low to be posted before month end.
We are 80% through our projected correction off the April 10 government crop report. Though tonight's crop progress report will show a fast planting pace, it will be under expectations on two fronts. One, the last of government crop insurance pre-planting dates occurs Saturday. After that, growers can plant at will. Two, we have three frost days this week across many areas of the Midwest -- Tuesday, Thursday and Saturday. Growers will be cautious about planting until after these events.
Note that 75% of the U.S. corn crop gets planted in May as frost and freeze dates are past.
Technicals read like this. Support underpins May corn at $6.10, and resistance is $6.34 then $6.40. Support for May beans is $14.10 then $13.90, with resistance up at $14.50 then $14.70. May wheat has support at $6.14 then $5.98. Resistance is $6.32 then $6.60.
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