Corn Market

                   USDA 2008 Corn Plantings – March 31st
             Actual    Ave Guess       Range          Final 2007  
             _____       87.387      85.7 – 89.75          93.6
 
                   USDA Quarterly Corn Stocks – March 1st
             Actual    Ave Guess         Range        December ‘07
             _____       7.076         6.950 – 7.254       10.269  
 
Old crop: Weekly export sales are nothing to write home about.  I get the impressions we have a “pause” happening here as that’s what inside days usually suggest.  We have lots of events to experience over the next number of days; month end, quarter end, USDA Quarterly Stocks and finally the “fund” roll beginning late next week.  After the recent Roller Coaster antics and with so much coming at us in the short term a little reflection wouldn’t hurt.  Wednesday’s highs are at some decent looking technical resistance levels.  Additional consolidation is probably the MO for trading on Friday.  I know demand for US corn has been pretty good from most sectors.  The ethanol grind, however, has slowed some.  I don’t think we are on pace with previous USDA projections for total disappearance.  That has prompted my ideas that additional amounts of carry should be within the old crop price structure and against the new crop.                  
 
New crop: So what’s it going to be; how many corn acres from last year are we going to lose.  Will the central southern areas of the Midwest experience legitimate planting delays?  I do know there are areas of southern Illinois that like to have some fields planted by March 31st, and so far that is not happening.  Like the old crop the price action of Thursday is advertising a time for reflection.  Personally I think we are going to get corn acreage figure with a friendly bias.  I like bull spreads within the new crop and I like being long new crop vs. old crop.  Wednesday’s flat price high represents some pretty good looking resistance.  To go on through this area more fundamental info is needed.  The funds have been getting whipsawed in the last couple of weeks so their participation has backed off some in the last couple of days.  I think if we are to see another leg higher it will have to come from the USDA or Mother Nature.  As of this writing Mother Nature may be trying to comply.  Time will tell. 

Wheat Market

                                 USDA 2008 Wheat Seedings – March 31st       
                            Actual     Ave Guess     Range      2007
All Wheat             _____        63.625            NA        60.433
Winter Wheat       _____        46.986            NA        44.987 (46.61 Jan ’08)
Spring Wheat       _____        14.147            NA        13.297
 
                                 USDA Quarterly Wheat Stocks – March 1st
                            Actual    Ave Guess     Range       March ‘07
                            _____         668         647 – 689        857
 
Old crop: the US is selling too much old crop wheat.  Based on old crop sales stocks will be drawn down to next to nothing.  I have to think that many of the sales that are on the books will get either cancelled or get moved to new crop time frames.  The USDA will have to reflect the contracted sales on the stocks data.  On the surface this number is be nothing but wildly bullish.  The question that has to be answered is “Have we already traded this data when old crop prices traded to its highs in late February and again in early Mid-March?  We have been putting carry back into the price structure; that is not too friendly.  Basis levels are getting stupidly wide again.  Many are going to basis new crop.  That means the fundamental bias is not there to support higher prices.  I have to think the grind lower will continue.                                          
 
New crop: In the near term it comes to how big of an acreage increase are we going to see vs. current conditions.  Shortly after that we will get to see the fund roll from old crop to new crop.   Funds will be rolling out of old crop into new crop.  Is the fundamental bias there to be long the new crop for longer term investors?   Given what I am hearing around the World about new crop conditions $10.00 plus new crop may not be justified.  The last attempt to rally in July futures, now failing, suggests a downside target of $8.00.  Yes, will have some weather scares, we already are seeing some, the western southwestern reaches of the HRW belt are too dry and there is concern that some of the SRW areas may be getting too wet.  If acreage increases are what we may think they are and the good conditions of the rest of the world continue, new crop wheat will continue to move lower.

Soy Complex

                       USDA 2008 Soybean Plantings – March 31st
                  Actual        Ave Guess           Range            Final 2007
                  _____           71.526       70.000 – 74.239        63.6
 
                       USDA Quarterly Soybean Stocks – March 1st
                  Actual        Ave Guess          Range        December ‘07
                  _____           1.352          1.290 – 1.425         2.329
 
Old crop: good demand for US soybeans with the Argentine producer strike adding to the momentum has brought old crop soybean prices back to some recently established technical resistance levels.  Stories continue around the eastern Midwest processor having problems originating soybeans, adding to this are some logistical problems with getting export soybeans down to the Gulf.  SA has a good looking crop.  The “however” to that is that despite a good looking crop they did not expand acres enough to offset the short US crop.  That is why I remain biased to owning old crop over new crop.  I also like the idea of owning soybean meal vs. soybean oil.  My personal opinion is that the bio-diesel play is a bust, not only in this country but Worldwide.  When meal gains on oil, more times than not, is bullish for soybeans.           
 
New crop: IS the US going to get the needed acres for new crop to alleviate the current old crop tightness?  I think they will.  After what happened last year with the need for corn acres the US producer has proven to me that he will always go where the bigger money is.  Talk of delayed planting in corn (I know it’s still early) normally gets us additional soybean acres.  The talk of double crop acres on SRW is huge.  As of this writing it is my thought we could see new crop beans move down to the $10.50 level prior to seeing an attempt at serious basing.  It is already thought that next year SA will increase its soybean acreage to levels that will most definitely stop the decline in World stocks.  I like the idea of bear spreading within the new crop; looking for additional amounts of carry within the price structure.

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