Canada Markets

After reaching an intra-day low of $5.25 1/2 on April 1, corn attempted to rally, reaching an intra-day high of $5.51 per bushel on two occasions: April 15 and April 18. Since then, selling pressure has taken over to push prices down below the most recent support level at $5.25 1/2, ending today's session at $5.22 3/4/bu.

The 2012 low of $5.11, reached June 15, is the next potential level of support for this future. This is the point where last summer's drought-fueled rally began, which would mean a full 100% retracement of the move from $5.11 to the high of $6.65/bu. has taken place. There is, however, solid chart support in the vicinity of the $5.11 low, with the February 2011 monthly low at $5.09 3/4 and the March monthly low at $5.12/bu. A break below $5.11 may result in a test of the 2011 low of $4.98 1/2, which was reached in January of that year.

Current reports of late planting are being shrugged off; instead, traders are focusing on next week's weather improvements in the American Midwest. Last evening's Crop Progress report from the USDA indicated that only 4% of the 2013 crop had been planted, as compared to 26% last year and 16% which is the five-year average. Some large producing states, such as Iowa and Nebraska, have not started, while others such as Illinois and Indiana were at 1%.

The risk in planting late is the risk of summer heat affecting the critical pollination stage.

This scenario will undoubtedly affect the Canadian feed barley market. While old crop barley prices have leveled off around the $290/mt level delivered Lethbridge for now, new crop prices have fallen from the $250/mt level down to offers in the $230/mt area and bids $10 lower at $220/mt. Both old-crop and new-crop corn are close to working their way into the feed rations, so further new crop weakness in corn will definitely weigh further on barley prices. Further pressure may fall on the barley market simply because the late spring on the Canadian prairies will undoubtedly lead to more barley acres, and in all likelihood, more feed supplies in general.

The growing old-crop/new-crop inverse (old crop trading at a premium to new-crop), whether it is corn or barley (or any other grain for that matter), is a loud and clear market signal to feed the old-crop demand or risk selling it in the new-crop market at much, much lower prices.

Cliff Jamieson can be reached at cliff.jamieson@telventdtn.com

(AG)

© Copyright 2013 DTN/The Progressive Farmer. All rights reserved.