Updated 5:00 pm

Beans find strong support from demand outlooks, while

Corn continues to slide on weather outlooks

SETTLEMENTS

July Corn: 607 ¼ (-7 ½)

Dec 08 Corn: 631 (-6 ¾)

July Beans: 1379 ½ (+37)

Nov Beans: 1325 ¾ (+36 ½)

July Wheat: 795 ¾ (-9 ¾)

Dec Wheat: 830 ¾ (-9 ½)

July KC Wheat: 835 ¼ (-7 ¾)

July Min Wheat: 1047 (-1)

July Meal: 350.2 (+11.7)

July Bean Oil: 62.1 (+0.82)

Corn struggled throughout the day before working its way back up late in the session. The planting intentions report yesterday came in as expected at 51 % planted. However, with dryer weather working its way into the Midwest the attitude seems to be that planting could catch up before next weeks report. If we do get some good planting progress this week the market will start to focus on the other fundamentals. This could give corn a large setback as we head into the growing season. The balance sheet will still be very tight so a large setback in late May or early June will be a good buying opportunity for this summer. Again, if there is a weather problem this summer all bets are off. Corn could rally dollars/bushel as it tries to ration the world coarse grain market; similar to what wheat had to do last winter. Either way, the report confirms that volatility and risk are not going away any time soon.

The soybean market had a strong day. In general, Soybeans have a number of supportive factors. The last S&D report showed that the balance sheets are tighter than people expected. In addition, there is still uncertainly in Argentina, which could only lead to further export demand. Furthermore, you saw traders selling corn and buying beans today, after they started to finally come around to the idea that the corn is going to get planted. Looking at the big picture, at these prices, soybeans will not get the acres they need next year. Both the U.S. and South America stand to lose acres to other crops at current prices and this will need to change dramatically over the next 6 months. There will continue to be arguments on the actual acres of soybeans that will be planted. There are valid arguments for both sides and only time will tell. Regardless, soybeans will need to trend higher to keep up with demand. In a $125 crude oil environment, soybean oil will stay supported at these price levels. The world vegetable oil market cannot afford to use large quantities of oil for Biodiesel. This should keep a moving floor on the oil market as we move forward.

The July puts that we bought will keep you protected on the downside. With less than ideal conditions, soybeans could rally to unimaginable levels this summer. It will be very hard to stay in the market without a game plan.

The Wheat market settled lower during the session. Crop conditions for winter wheat were virtually unchanged. The wheat market has had a large break. However, the market continues to fail to hold any rallies. The US crop looks good and there does not appear to be any severe problems with other growing regions. The cash market is coming close to being competitively priced as a feed ingredient. However, if we see a large break in corn, the wheat will have a ways to go to become competitive. We will look to take off our puts once we get through harvest. If the corn market falls from here, wheat should follow.

Regards,

EHedger LLC

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