Today's Spotlight Market
Highlights from Tuesday's USDA grain stocks and planted acreage report:
Corn stockpiles as of June 1: 4.447 billion bushels
Corn planted acreage 2015: 88.897 million acres
Soybean stockpiles as of June 1: 625 million bushels
Soybean planted acreage 2015: 85.139 million acres
Corn bulls received a nice surprise courtesy of the U.S. Department of Agriculture (USDA) on Tuesday, as it appears that U.S. Grain usage was higher than expected. That was the key takeaway from the USDA quarterly grain stock report which provided traders the latest estimate as to the size of the U.S. grain and soybean stockpiles. As of June 1st, the USDA estimated U.S. Corn inventories at 4.447 billion bushels. This was 65 million bushels below average analyst estimates. While old-crop Corn inventories are still up 15% from this time last year, usage from March through May of this year totaled 3.3 billion bushels, vs. 3.16 billion the same time last year. On top of lower Corn inventories, the USDA also lowered its estimate for planted acreage this season to 88.897 million acres, vs. 89.199 million acres in its March report. If accurate, U.S. producers will have planted about 1.7 million fewer acres of Corn this season compared to last year. With the June USDA crop report now on the books, traders will once again turn their focus to weather forecasts where a wet start to the growing season has affected crop conditions. The USDA weekly crop progress report showed 68% of the U.S. Corn crop was rated good to excellent, vs. 71% the prior week. For comparison, 75% of the Corn crop was rated good to excellent this time last year. The largest reduction in crop conditions was noted in the eastern Corn Belt, where heavy rains have led to flooded fields, which could reduce harvested acreage totals. While the old adage "rain makes grain" certainly has some validity, especially as we head into the key pollination period in July, producers may be faced with "too much of a good thing" as far as rainfall is concerned in 2015.
Looking at the daily chart for new-crop December Corn futures, we note the nearly "parabolic" up-move the past 4 trading sessions, as prices have risen over 40 cents in the last few sessions. Tuesday's rally saw prices rising by over 7% for the session, as a close above the 200-day moving average may have signaled an end to the Corn bear market that began last summer. The 14-day RSI has surged higher and is now well into overbought territory, with a current reading of 76.56. While momentum now seems to favor those in the bullish camp, we cannot rule out a near-term price correction, especially if weather forecasts turn drier in the coming days. The next chart resistance level is seen at the December 29th high at 440.00, with support found at the May 18th high of 381.50.
Mike Zarembski, Senior Commodity Analyst