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Grain Hedge: Grains Trade Sharply Lower as Planting Pace Ramps Up

Grain Hedge: Grains Trade Sharply Lower as Planting Pace Ramps Up

16 May 2014

US - Grains traded lower across the board this week as a combination of planting pace, demand side factors, and a weak technical environment pressured prices, reports grain analysts at Grain Hedge.

Grain HedgeThe wheat complex lead grains lower, giving back much of the ground gained since mid-April.

Poor crop conditions across the Southern Plains have propelled the wheat complex higher in recent weeks but international demand concerns have started to pressure futures in Chicago, Kansas City, and Minneapolis. Thursday's export sales report showed just 55,000 tonnes of old crop wheat sold the week ending May 8th, the second lowest weekly total since January.

This report indicates that U.S. wheat will have a difficult time finding export interest at current price levels, especially considering the very large world ending stocks projected in the May USDA report. The next area of technical support to watch will be $6.70 - $6.75 on the July Chicago wheat contract.

Selling in the wheat complex had spillover consequences for corn, down 4% for the
week on the front-month July contract. Ethanol production was up 28,000 barrels per day despite an ethanol crush margin now below $3.00 per bushel. Export sales were in-line with trade expectations at 343,000 tonnes.

New crop corn futures found pressure by Monday's crop progress report, which showed U.S. corn planting now 59% complete. This was up 30% in just one week and now slightly ahead of the five year national average.

Some of the largest gains were seen in the heart of the corn belt, with Iowa reporting 70% of the 2014 corn crop now planted. Concerns about planting pace should no longer support December 14 corn futures and traders will focus on emergence and crop conditions in the weeks to come.

Soybeans showed relative strength in the grains as expectations for a very large April crush figured supportive futures. Thursday's NOPA crush report did not disappoint, with 132.67 million bushels reported crushed during April. This was the largest April crush in 5 years and confirmation of the 10 million bushel increase to crush demand projected by the USDA in the May USDA report.

New crop soybean futures were pressured by Informa numbers on Thursday, which projected 2014 soybean acreage at 82.1 million acres. This is 500,000 acres higher than current USDA projections and will fuel concerns that this year's record soybean acreage will only get larger by mid-June.

Looking ahead, planting pace and crop conditions will drive new crop futures. Current weather models predict a wet week for the western and northern grain belt, while Illinois, Indiana, and Ohio should see a drying pattern over the next 6-10 days.

TheCropSite News Desk

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