Daily Market Commentary
April 21, 2017
Weather maps for the month of May project great planting weather throughout the Corn Belt. Precipitation will be below normal with temperatures at or above normal for the month. This forecast has kept traders from adding any premiums to the corn market the last week. Unless we see a change in forecast steady is the best call for corn prices.
Weekly export sales were steady for corn but below the 10 week average for the second week in a row. With US prices higher than South American corn in the summer months by 6-10 cents/bu. I look for exports to continue to drop. Price is not the only factor in this year’s exports as vomitoxin levels from the 2016 crop continue to haunt the market. Smithfield Foods (world’s largest pork producer) recently purchased a shipment of corn from Paraguay that will arrive in Wilmington NC in the next month. The grain was shipped to Brazil from Paraguay before being loaded onto a US vessel. If loaded to its capacity, this would be the largest US import of Paraguayan corn ever. Cheaper corn and zero vomitoxin are the reasons for the purchase. How much more business will the US lose?
I would advise producers to lock in basis ASAP for any old crop corn or beans that you have left to move.
Regardless of weather and planting progress, basis is going to continue to widen. Sales of 20-30% should be made for January thru July of 2018 at current prices ($3.70-3.80). The worst thing to do in a large carryout market is to wait until delivery time to lock in prices. Wisconsin producers have to move 52 million more bushels between now and October 1, 2017 to have the same carryout as we had in 2016 (72 million bu.). With demand for that timeframe only projected at 26 million bu., we will have 26 million more bushels on hand 10/1/17 than we did on 10/1/16!
Have a Safe Day!