Lots of reports to address, so let's get started. The weekly export inspection report came out at 10:00am Central Time, Monday, May 10, 2010, as it does each week telling us how much of each grain a U.S. exporter asked the U.S.D.A. to inspect before being shipped. This is a good near-term demand signal as its grain usually shipped within 30 days. Wheat inspections were 20.7 million bushels (m.b.) versus 17.8 m.b. the week prior; 11.7 m.b. a year ago; and four-week average of 15 m.b.
It looks good on paper to see an increase, but the sharp dollar increase last week put U.S. wheat over priced to eastern world countries. Over the weekend a massive world wheat purchase took place and it all went to export competitors. Only Asian markets are turning to U.S. ports on our favorable shipping proximity. Demand fundamentals remain neutral to negative.
Corn inspections were 29.7 m,b. versus 33.5 the week prior; 46 m.b. a year ago; and four-week average of 32 m.b. year-to-date inspections are 33 m.b. over the year prior. We are at the low end of what is considered friendly demand numbers. Considering we closed Friday near our five week high and demand usually pulls back ahead of big government crop reports such as this week, it is not a bad number, in fact, it is supportive considering the conditions.
Bean inspections were seasonally soft at 5.3 m.b., versus 8 m.b. last week; 10.8 m.b. a year ago; and four-week average of 10 m.b. year-to-date inspections are 274 m.b. over a year ago.
Longer term demand for corn looks great as China continues to not export to Asian neighbors who are turning to us to fill needs and as China draws on their reserves to keep hogs and chickens fed post their drought, we have to expect them to replenish corn stocks by becoming an importer of U.S. corn in the month's ahead.
Bean demand will again be another record for U.S. exports. China's bean imports for us were up 5% in April from the month prior putting purchases up 10% from last year record exports. China is expected to import record world bean tonnage in May and June. Much will come from South America but expect equal or better than a year ago U.S. sales.
Monday's 3:00pm crop progress and condition reports came out and these weekly reports become more important each week as crops get planted and quality level ratings determine yields.
Our winter wheat crop came in at 66% in good-to-excellent condition down 2% from the week prior, but 20% over the year prior and still a very good quality rating. Key loser was Number One wheat producing state: Kansas, 64% Good-Excellent; down 6% on the week. 40% of the crop was head developed. Weekend frost and low temperatures may cut quality their again, but rain this week in the southwest should improve quality there again, and rain this week in the southwest should improve quality in Texas, Oklahoma, and Colorado. There is nothing in the winter wheat numbers telling the price of wheat to respond .
Now , the spring wheat grown more north , may have suffered from the past weekend frost. 67% of the crop is planted with 38% emerged from the ground in need of sunny warm days and timely rain. North and South Dakota were 24% and 59% emerged with Minnesota 87%. We did not have our first condition rating yet but clearly early emerged crops abated on quality, but nothing should be lost as the heads are not developed yet. No problem here to trade yet, but a situation on weather to watch.
Corn planting came in at 81% complete with 39% emerged from the ground. There was talk Monday that low temperatures and frost in northern Iowa, South Dakota into Minnesota killed some acreage and would need to be re-seeded, but this was early field talk and the market doesn't have a feel for the extent of concern here. It will take until Thursday or Friday to get good field data and then if the data suggests a broader damage to be concerned about, then prices will respond.
Soybean seeded was 30% complete versus 13% a year ago; and five-year average of 19%. 7% is emerged from the ground. There was not enough emerged in the northern states or western grain belt to get damaged by the weekend cold blast. Crops overall are getting in early but this week looks to slow things. WXRISK.com the weather site sees the entire Midwest grain belt getting hit with two fast moving systems early and late week bringing 75% coverage of .25 to 2.00 inches of rain on each, giving lofty rain totals for the week.
Next week, the southwest wheat states and southern delta look wet to start the week, but the Midwest could be turning drier by May 19 through 25. This could set up a timely finish to planting setting up a normal planting season by comparison to the last two. Then the excitement begins, as it is not what you plant, but what you grow. If the long term El Nino weather pattern we are in comes to play, most weather gurus predict a warmer and drier-than-normal late June through into September. Today Tuesday the U.S.D.A. monthly crop report came out prior the opening. It put wheat ending stocks at 950 m.b. unchanged from the month prior. Corn ending stocks for this year were put at 1.738 b.b. down 161 m.b. from the month prior. This comes on larger export projections that set in motion a thought process that demand will lower ending stocks on future reports. Beans ending stocks were unchanged on the month at 190 m.b. They raised the crush demand and exports for the fourth consecutive month but offset the usage by lowering residual usage which is the governments way of playing a shell game. The bottom line is demand continues to offset production and should continue in the months ahead .The report overall was digested in the first thirty minutes.When the trade comes in Wednesday they will say , what report, and go back to trading outside markets and the weather. Corn basis july has support at 3.60 and resistance at 3.75. A close over 3.78 and buy aggressively as next is 3.88 then 4.04. Beans basis july find support at 9.48 and resistance at 9.90 then 10.30 .July wheat has support at 4.92 then 4.80 with resistance at 5.12 then 5.30. Buy support or a close over 5.12. Trend following fun have bought back shorts five straight weeks and look to continue but they buy back the shorts on the breaks not the rallies. Don't forget my Wednesday web session on grains .I will send a e-mail blast out with the number to call and get a password to get in .