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CME: Corn Futures Closed Lower Wednesday

18 April 2013

US - May Corn finished down 2 3/4 at 660 1/2, 4 3/4 off the high and 4 up from the low. July Corn closed up 1/2 at 641 1/4. This was 5 3/4 up from the low and 3 3/4 off the high.

May corn struggled to find support today as traders took profits in bull spreads which helped the new crop contracts trade into positive territory.

Fears that wet conditions will delay corn planting helped to support the market. Cool and wet conditions will prevail into this weekend for areas of the Northern Plains and temperatures will warm up into next week.

The risk of extreme flooding for the region later this month and into May could delay corn planting or force farmers to switch to other crops. This morning's ethanol production data disappointed traders after production for the week ending April 12th averaged 832,000 barrels per day, down 2.6% vs. last week and down 5.9% vs. last year.

Total ethanol production for the week was 5.82 million barrels. Old vs. new crop corn spreads broke down on the news and basis is beginning to crumble in the eastern Corn Belt which added to the bearish tilt in calendar spreads.

This crop year's cumulative corn used for ethanol production is 2.72 billion bushels. Corn use needs to average 88.36 million bushels per week to meet this crop year's USDA estimate of 4.55 billion bushels, up slightly from the week prior.

Stocks as of April 12th were 17.51 million barrels, down 1.6% vs. last week and down 20.3% vs. last year. Implied demand jumped to 6.1 million barrels, that's up from 5.67 the week prior.

Ethanol margins continue to be the bright spot for the bull camp with Iowa margins improving to 57 cents per bushel, up from 54 the week prior. This is the strongest margin of the crop year and the highest since late 2011.

May Rice finished down 0.075 at 15.53, equal to the high and 0.02 up from the low.

Soy Futures Closed Higher

May Soybeans finished up 10 3/4 at 1422 1/4, 7 1/2 off the high and 16 1/4 up from the low. July Soybeans closed up 4 3/4 at 1380. This was 12 up from the low and 9 1/4 off the high.

May Soymeal closed up 6 at 407.3. This was 6.9 up from the low and 1.5 off the high.

May Soybean Oil finished up 0.41 at 49.39, 0.32 off the high and 0.83 up from the low.

May soybeans traded slightly lower midday but exploded to the upside late in the session with the May contract leading the charge.

The breakout was likely technically driven but there were also rumors that the port workers in Brazil may go on strike tomorrow. No confirmation of this has been made at this point. November soybeans traded down on the day due to delays in corn planting for the US Midwest and Northern Plains which could switch some acreage over to soybeans.

Cool and wet conditions will plague North Dakota, Minnesota, and Wisconsin into this weekend before warming up next week. The US CIF basis was weaker midday on light export demand which helped to push futures lower but bull spreads held up rather well and meal was higher which suggests the market is still well aware of the rationing job that is needed in the US crush market.

Cash basis in processor markets remains extremely firm as processors fight for local bushels in order to fulfill meal sales commitments. The World Health Organization suggested today that a number of people who have tested positive for the new strain of bird flu in China have had no history of contact with poultry, adding to the uncertainly of the situation which has killed 16 people.

The investigation is ongoing but the uncertainly over the situation suggests infections could rise from the current 77. Consumer demand in poultry has been sluggish as of late which could have a negative impact on meal demand in China.

Wheat Futures Closed Higher

May Wheat finished up 1/4 at 703 3/4, 11 3/4 off the high and 5 1/4 up from the low. July Wheat closed down 1/2 at 707 1/4. This was 5 3/4 up from the low and 11 off the high.

Chicago and KC wheat traded higher for most of today's session on a most mixed day for physical commodity markets. Copper was sharply lower, gold traded both sides of the unchanged and crude oil fell by over 2%.

Another freeze event will move across the western plains overnight with temperatures expected to drop down to 22 degrees in Goodland, KS tonight, 29 in Liberal, KS, and mid 30's around Enid, OK. Wheat maturity is well behind schedule in some of the northern regions of KS so damage may be cosmetic rather than outright winterkill.

Some traders suggest up to 3 million acres in KS may have been affected by the recent freeze events and up to half of these acres may end up with dead wheat.

These are preliminary estimates at this point and confirmation of total damage won't be made for another week to 2 weeks. To offset, current demand in the KC market is sluggish which should help improve the carryout in the 2012/13 crop year.

US equities pushed sharply lower which likely caused some funds to cover existing positions in peripheral markets. The higher trade in the wheat market may have been more a function of outright short covering rather than fresh long positions.

May Oats closed up 11 3/4 at 386 1/2. This was 15 1/2 up from the low and 1 1/4 off the high.

 


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