It’s a long growing season and it appears that the speculative community believes that prices might continue sliding if normal weather conditions prevail through harvest. Record short positions in futures and options might just be the tip of the iceberg as we don’t know what’s going on in the over the counter and swap markets. We still sense that future weakness might be found in basis levels rather than the board as farmers may have to give up the physical if faced with storage tightness yet, there will be a reluctance to sell sub breakeven levels. We have to hope that there are great, great, great yields in all grains so everyone can find their silver lining.
The reversal of fortune in grains since last Summer needs to remind end users that entities might be wise to take extended coverage as this too, shall pass!
The amount of deliveries against the Chicago May contract on first notice day may serve as a reminder that there are lots of bushels of potentially unfit for human consumption, according to the FDA, in the carryover/carry in. The twenty cent discount isn’t enough for these bushels to compete with corn, yet, though we’re getting closer every day. It would be a ray of sunshine if the market commanded that these bushels work into the poultry market in June/July/August/ September but we might have to see a severe loss in corn acreage the next few weeks and surging basis levels for corn for this to happen. Yet, we can dream! If the poor ratings for eastern soft red wheat continue and we end up with a poor quality and/or yield crop then things might get very volatile in July/August/September.
The information contained on this site is the opinion of the writer and obtained from sources cited within the commentary. The impact on market prices due to seasonal or market cycles and current news events may already be reflected in current market prices.
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