Pre-Opening Corn Market Report for 6/1/2011

July corn was down 2 1/4 cents late in the overnight session, but it traded as much as 8 3/4 cents higher at one point. Outside market forces look mostly negative, with weaker metal and energy markets but also a weaker US dollar. A combination of the dry outlook for the US for another week or more and rain in the forecast for Europe appeared to be enough to turn the market weaker overnight, after it had a strong start. December corn hit a contract high last Thursday, but better weather for getting the crop planted is beginning to pressure the market. Traders had expected yesterday afternoon's Crop Progress Report to show US corn plantings to be around 89% complete, but the actual number came in at only 86% . This compares to 79% last week, 97% last year, and 92% as the 10-year average. Ohio was just 19% planted versus the 10-year average of 82%, and Indiana was 59% done vs. 77% on average. The report also showed that 63% of the crop was rated good/excellent, compared to 76% last year and a 10-year average of 67%. However, the forecast for 10 days of mostly dry and sometimes hot weather for the heart of the Corn Belt is seen as a factor which will help improve planting progress and crop conditions. The shift in the forecast to significant for Europe next week added to the negative tone overnight. Some traders believe that higher pork prices reported in China over the past few weeks could mean there will be increased feed grain demand coming from China. While there are some drought concerns in China, their corn production outlook is still favorable. Many traders are concerned that dryness issues could come up quickly if dry weather occurs in June. Newspaper reports from China suggest that 7 million hectares of farmland have been affected by drought. Weekly export inspections, released during the session yesterday, came in at 36.6 million bushels, which was near the high end of expectations. In order to reach the USDA projection for the year, corn shipments need to average 42.8 million bushels each week for the rest of the season. Traders indicated that 18.2 million bushels of corn moved out of the USDA loan program. That still leaves 384 million bushels tied up in the program.
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