Wednesday May 13, 2008

Today Grains closed mixed in Chicago as July Corn closed -1, December Corn -3/4, July Soybeans +10 1/2, and November Soybeans +2.

In the corn market, many things are at work. The USDA Supply and Demand Report on its own was bullish new crop corn as stocks to use levels are near 10%. First and foremost, the market is trying to balance planting delays in the east with what seems to be near on par in the west especially as corn tries to rally and the westerners sell cash against it. Secondly, an inability for much of the domestic demand especially from the feed sector to follow this market higher after being crippled by an extreme rally over the past few years. Third,stopping any major livestock rally is the consumer's inability to pay up for packaged meat on the shelf. Fourth, a strong bearish wheat seasonal that tends to play out in mid to late May.

In the soybean market rumors circulating about China buying 1-2 more cargoes of old crop soybeans from the U.S. Many are suggesting that the USDA continues to overestimate US carryout at 130. That by the time harvest arrives and early new crop soybeans are available we will be down to pipeline minimum. This suggesting continued need for old crop soybean premiums. As far as new crop soybeans, a 230 bushel carryout is comfortable yet not burdensome. Is the market sourcing new crop soybean acres away from corn?? I believe it is, as weather patterns are not conducive to corn planting progress. Although, many believe that it is not the United States that can balance the world supply and demand for soybeans it is South America. Thus the need for new crop soybeans to buy acres there in a longer term play is key.

Jeff Neisler