Yesterday morning, USDA announced the sale of: 676,000 mts of old crop corn to China 408,000 mts of new crop corn to China We were surprised to see December corn trade above $7.00 Monday. Yes, it was just a half cent above $7.00, but it would be reasonable to think there were 1 to 2 billion bushels of December corn offered for sale at $7.00, which means it would take more than 1 to 2 billion bushels of buying at $7.00 to get the market to move above $7, even a fraction. Maybe farmers have sold all the new crop they want to sell until they get the new crop planted or maybe there is a much larger demand for $7.00 than we expected. In any case, trading above $7.00 the first day in 9½ years the market touched $7.00 is bullish, very bullish. On the other hand, it was announced yesterday that over a million mts of corn were sold to China. We have sold more than a million mts of corn in one day maybe 15 times the past 50 years. It is a huge amount of corn. The big sale was announced two days after the most bullish corn acreage report you will probably ever see in your lifetime. Throw in the very dry Western Corn Belt, the 14 million mts of corn hung-up in Ukraine and an inflation mad-dog chasing these markets… What bullish news could possibly top what we just saw the past two business days? I agree, if it does not rain at all in July in Iowa, corn will go higher, but normally it rains in Iowa in July. What could make this market go significantly higher? Inflation, yes, possible, but $7 is pretty inflated already. Corn will not break hard until we get corn planters rolling in warm soil and that is at least three weeks away. That half cent is very significant. For example, after the “psychological” resistance of $7 was broken, why didn’t technical and panic buying kick-in and run this market another 10 cents higher? Note: we are not calling a top yet in this corn market, but maybe we are a lot closer than we think. USDA issued its first Crop Progress Report of the 2022 season last evening. USDA reports US corn planting is 2% complete vs. 2% expected and 2% average.
Winter wheat was rated 30% good or excellent vs. 40% expected. Spring wheat is 3% planted vs. 2% expected and 2% average. Kansas winter wheat was rated at 32% good/excellent, Oklahoma was 22% good/excellent, and Texas at 7% good/excellent with 57% rated not just poor, but very poor. Winter wheat is 4% headed vs. 3% average.