Corn Moves On Futures Rally 4:04 PM, March 31, 2006
DOW JONES NEWSWIRES
Cash corn movement picked up Friday after futures prices rose to seven-month highs on news that 2006-07 acres are estimated down 5% from last season and would be the smallest in five years, sources said.
While the news sparked corn movement across the U.S. as farmers sold to take advantage of the higher prices and also free up cash ahead of planting season, the movement wasn't as strong as some analysts had anticipated. Thus, basis levels held up fairly well and didn't weaken as much as expected in some locations, cash contacts said.
"We didn't see a lot of weakening (in corn) basis...so not everyone was running to the well to make a sale," said Jacque Voeks, senior market adviser at Stewart-Peterson Group in West Bend, Wis.
"Plus, they (elevators) knew if they widened the basis that no one would sell to them," she added.
A snapshot shows corn basis was mostly steady to weak, with Omaha, Neb., down 2 cents, Des Moines, Iowa, steady, Cedar Rapids, Iowa, 7 cents weaker and Memphis 3 cents weaker.
Still, the corn and soybean data released Friday morning caught nearly everyone in the market off guard.
On the bearish side of the equation, U.S. soybean acreage is estimated up 7% from last year to a record 76.895 million acres, compared to the average trade estimate of 74.050 million.
Elevators across the country implemented protection of 10-15 cents a bushel on soybeans anticipating a decline in futures prices. May soybeans on the Chicago Board of Trade accommodated and lost 16 1/4 cents to $5.71 1/2 and new-crop November was down 12 3/4 cents to $6.02 3/4 a bushel.
Corn plantings for 2006-07 are estimated at a bullish 78.019 million acres, down from 81.759 last year and below the average trade guess of 80.576 million. Most-active May corn gained 8 1/4 cents to $2.36 and new-crop December added 8 cents to $2.68.
With the corn futures rally, however, it is likely that corn "bought a few acres away from beans," said Voeks.
The USDA pegged wheat plantings at 57.128 million acres, down from the average trade estimate of 58.294 million but up from 2005 seedings of 57.229 million.
On the quarterly stocks data as of March 1, corn and wheat were close to the average trade estimates, at 6.987 billion and 972 million, respectively, while soybeans were a bit under the average at 1.669 billion bushels.
CIF Mississippi River basis for corn and soybeans was 2-4 cents weaker Friday, while soft red winter wheat futures held mostly steady. Higher barge freight rates, with nearby values 10-40 percentage points higher than Thursday, were cited for the weak basis, making it more expensive to ship grain.
CROP WEATHER
Central parts of the Great Plains are recovering from recent locally severe thunderstorms, which spawned several tornadoes and produced large hail. Pastures and winter grains are benefiting from recent soil moisture improvements in the northern and central Plains, but windy, dusty, dry conditions are causing renewed crop deterioration in the southern Plains, the USDA's Joint Agricultural Weather Facility said in its daily forecast.
Weakening thunderstorms are still producing locally high winds in the eastern corn belt, while rainfall is boosting soil moisture ahead of planting and aiding vegetative winter wheat.
Meanwhile, a storm front out West will produce a new round of showers and thunderstorms across the Plains and Midwest by early next week. A new Pacific system will arrive in California and the Southwest early next week, the forecast said.
Cool conditions are expected to persist in the West, while near- to above-normal temperatures are seen east of the Rocky Mountains.
