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BRIAN HOOPS

By Staff | Apr 12, 2013

CORN

In the prospective plantings report, the USDA estimated U.S. producers would increase 2013 corn seedings to 97.3 million acres. This will be the largest seeded acres estimate since 1936.

With the lower input values of corn, the profitability of corn and dry weather will encourage additional acres of corn to be seeded this spring, however the lack of moisture will limit the amount of corn-on-corn acres.

Like the month of March, April will have commercial and seasonal traders buying weakness for a potential summer weather rally as the uncertainty of the growing season will have end users very nervous about weather and this year’s crop after a disappointing crop last year.

Midwest producers will begin to seed corn acres by mid April and weather will become very important to pricing by May.

If the month of April is wet and hampers producers planting efforts, look for December corn to rally in an effort to entice producers to plant corn later, rather than switch acres to soybeans.

Currently, the U.S. is experiencing a pattern of cool weather and soil temperatures that will need to warm up before corn will emerge.

SOYBEANS

In the prospective plantings report, the USDA estimated U.S. producers will seed 77.1 million acres, down slightly from last year, but still the fourth largest in history.

Producers do not appear willing to increase seedings more than this as profitability of soybeans versus corn favors corn at this time.

The quarterly stocks report and world-ending stocks ensure the world has an adequate supply of soybeans and the market is not signaling to producers to increase seeded acres in 2013.

In the month of April, the soybean market has one simple job – rebound and compete again with corn this spring so it does not lose any acres.

In April, soybeans should find support from an effort to return to profitability to encourage farmers to not switch from corn to soybeans.

Also, a planting season that is slowed by heavy rains, will encourage farmers to switch plantings of corn over to soybeans, therefore look for soybeans to maintain their premium to corn to ensure adequate supplies of soybean stocks.

CORN ANALYSIS

Corn closed the week $.66 1/4 lower. Last week, private exporters announced a 120,000 metric tons new crop corn sale to an unknown destination.

In the weekly export sales report, corn sales shows 12.4 million bushels slated for 2012/13. This is above the 10 mb that is needed to stay on pace with the USDA forecasts of 825 mb.

Last week, Texas corn plantings jumped to 54 percent complete from 48 percent last week.

This is well ahead of last year’s pace of 47 percent and the average pace of 48 percent.

Southern producers are taking advantage of early planting conditions with Louisiana at 95 percent seeded, Alabama at 13 percent done and Georgia at 30 percent.

Corn broke through key technical support and closed sharply lower under the weight of fund-selling as they attempt to liquidate long positions.

A weather threat during the growing season is the only hope for a corn rally.

Strategy and outlook: Producers are now 80 percent of 2012/13 crop and are also 40 percent sold of the 2013/14 crop. They re-owned 50 percent of the 2012/13 corn crop with July calls.

SOYBEANS ANALYSIS

Soybeans closed the week $.43 lower from last week. Last week, private exporters did not report any private sales.

In the weekly export sales report, soybean sales were 24.8 mb. This is well above the 1.5 mb that is needed to

stay on pace with the current USDA forecast of 1.345 billion bushels.

Soybeans have fallen to the winter lows as private export sales of soybeans has slowed and South American harvest pressure has gained steam.

The commercials are buying the weakness, a good sign of a summer rally that will occur during the U.S. growing season.

Look for long term support on the weekly charts to hold as this is the point where commercial buying should increase and gain strength.

For producers wanting to re-own previous sales, this is an excellent opportunity.

Strategy and outlook: Producers are 80 percent sold of the 2012/13 production and are 40 percent sold of 2013/14. They re-owned 50 percent of 2012/13 production with July soybean calls when July futures hit $13.75.

Brian Hoops is president and senior market analyst of Midwest Market Solutions Inc. Midwest Market Solutions is a full-service commodity brokerage and marketing advisory service, clearing through R.J. O’Brien. He can be contacted at 605-660-1155.

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