"Corn, soybean and wheat prices have
traded in a wide range since March," noted Darrel Good.
"The rapid increase in corn consumption
and declining U.S. and world inventories increase the
importance of the size of the 2006 U.S. corn crop," he
noted. "Planted acreage in the United States is less than
planted last year, although it likely exceeds March
intentions, increasing the importance of the U.S. average
As Good indicated last week, the 2006
crop is in relatively good condition early in the growing
season, with 71 percent of the crop rated in good or
excellent condition as of June 4.
"However, current prospects for hot
weather in western and southern growing areas, along with
areas of moisture deficits, suggest that crop condition
ratings and yield expectations may decline in the
near-term," he said. "It would not be surprising to see
December corn futures challenge the contract high if yield
concerns persist through the end of the month."
Soybean supplies are abundant,
suggesting that prices might be less sensitive to early
season weather and crop concerns, but that has not been the
"Large speculative trading will likely
keep soybean prices more volatile than suggested by large
supplies," Good said. "November soybean futures appear to be
well-supported above $6, with some reluctance to trade above
$6.35. For now, a move above the recent trading range
appears more likely than a move below that range.
"Downside price risk, however, is
significant if the 2006 average yield is near trend value."
Considerable uncertainty still exists
about the size of the U.S. winter wheat crop, spring wheat
acreage and spring wheat production, he noted.
"In addition, early season export sales
have been near the level of a year ago," he said. "While new
highs in Chicago futures do not appear likely, some recovery
from the recent decline is expected."
December 2006 corn futures declined to
about $2.50 just before the USDA's March Prospective
Plantings report revealing producer intentions to reduce
corn plantings by 3.74 million acres. That contract raced to
a high of $2.88 in mid-May but settled at $2.6775 on June 9.
November 2006 soybean futures traded
above $6.25 in early March, declined to $5.85 following the
USDA's report showing producer intentions to increase
soybean plantings by 4.75 million acres, traded above $6.35
in mid-May and settled at $6.155 on June 9
September 2006 wheat futures at Chicago
traded above $4 in late February, declined to near $3.60 in
late March, peaked over $4.40 in late May and settled at
$3.89 on June 9.