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Published May 10, 2010, 02:46 PM

Corn and soybeans can’t find a trend

For soybeans and corn, I would say trendless would describe those two markets quite well.

For soybeans and corn, I would say trendless would describe those two markets quite well.

Corn futures rallied nicely to new highs May 6 on huge weekly export sales and anticipation that the 674,000 metric tons of corn to Japan actually may be headed to China. July corn was unable to hold onto a higher weekly close, and that still may leave a cloud of doubt over the market.

Informa came out with its estimates for new crop corn acres at 89.6 million acres, up from a previous guess of 89 million acres. That is no surprise as many producers we talk to have added more acres because spring was nice and planting conditions have been better than in many years.

Informa’s estimate on soybean acres came in larger as well, at 78,500,000 acres up 400,000 acres from its previous guess. Some wheat acres that didn’t get planted last fall may go to soybeans, but there are nearly 3 million more acres of CRP coming out of the program.

Bears have anticipated that China would not take most of the soybeans it front-end loaded as it switched origins to Brazil. This hasn’t happened.

Soybean shipments to China are expected to surge in the next three months and domestic prices have turned modestly lower there. The real concern is how well its ports will handle the record volume destined for China. China National Grain and Oils Information Center estimates the April and June import total could reach 14 million metric tons.

Weather in northeast China has not been very helpful for soybean and corn planting. Soybean planting is falling behind by about 15 days. Forecasts call for cool and wet weather. Heilongjiang’s forecast calls for temperatures to run 2 to 3 degrees below normal. In the northeast, the corn planting will lag with temperatures forecast 4 to 8 degrees below normal with rain the week of May 10. That, too, will delay plantings in China’s largest corn-producing province, Jilin.

Precipitation in Heilongjiang has been 90 percent greater this year than last. Corn planting there is 10 to 15 days behind normal. Farmers are said to be planting earlier-maturing varieties of corn, which will result in lower yields. Soy acres are expected to decline appreciably this year as corn and rice take over.

Soybeans’ recent hard break has come back to a good support level. This area needs to be watched as it contains a trend line from the lows of last fall. After seeing the best highs since January, July soybeans traded down to be within striking distance of April’s lows of 941½. This level taken out in May would be a bearish implication for this market, spelling weakness into June.