Nogger's Blog

30/06/11 -- We can forget what the overnights did now that we have the USDA numbers to hand. And for corn bulls that is exactly what there are in cryptic crossword parlance NUMB-ers, as in things that make you numb. The corn area estimate was the second highest since the war.

Not only did the USDA come out with a corn acreage number miles above what the market was expecting, they went for the double whammy of June 1st stocks much bigger than anticipated. Indeed both numbers were higher than even the highest trade estimates.

The June 1st stocks were above the average trade estimate for wheat and beans as well as corn, although all those extra corn acres have to come from somewhere, and in this case it's soybeans.

Soybean acres were 1.3 million lower than the average trade guess and 300,000 under the lowest trade estimate. Wheat was about in line with what was anticipated.

So you could call the report very bearish on corn, neutral wheat and friendly for soybeans. The early vibe is already for a limit down opening on corn, which may well drag the others down with it.

Lost in all the excitement were the USDA's weekly export sales figures. They came in at 545,100 MT for wheat (550,000 to 750,000 MT expected); 934,300 MT for corn (650,000 to 950,000 MT) and 122,500 MT for beans (200,000 to 400,000 MT).

The soybean sales were actually 335,600 MT negative for old crop and 458,100 MT positive for delivery in 2011/2012.

From a weather perspective things look less threatening.

"The heat wave this weekend will be cut off by a cool Canadian air mass descending into the Dakotas, Nebraska, Iowa and Minnesota on Saturday. This would weaken a dome of hot air. High pressure is expected to rebuild next week, strengthening Tuesday-Wednesday, and bringing heat back to the Midwest. However, once again a wave of cool Canadian air would descend into the United States Thursday. This one would be stronger, pushing cool air deeper in the South, and forcing the heat dome to retreat westward.

"Rainfall chances look good for the Midwest and Mid South next week with deep penetrating cool front. The dome of hot air would take up residence in the Southwest United States as cooler air gains the upper hand in the Midwest. Very favourable growing conditions are indicated on the 6-10 day forecast," say Martell Crop Projections.

Having sold around 85,000 corn contracts in the last fortnight, the funds seemed to have regained a bit of belief this week, it will be interesting now to see if this is the final nail in the coffin for corn.

Early calls for this afternoon's CBOT session: corn limit down, soybeans and wheat down 15-20c.