Grain Spreads: Damages

Sean Lusk General Commentary Leave a Comment


Front month grain contracts took the brunt of the selling today as terminal outages in Louisiana due to the Hurricane potentially gave thoughts to decreased near term demand. Power outages in the U.S.’s busiest AG port raised concerns  about supplies building with nowhere to go. Sep 21/Nov 21 beans which were trading at a 40 cent inverse just days ago, traded back to parity today. Sep 21/Dec 21 corn traded from 7 cents inverted to a 7.2 cent carry today. Coupled with harvest pressure the storm damage added to the weakness seen in Corn and Beans today in my opinion. Wheat was no exception either as Sep/Dec Kc traded to 9 under. Quietly ,Chicago Sep/Dec wheat has pushed to a 13.2 cent carry.The continued deterioration of available quality global wheat stocks may potentially push some additional export demand to the US later in the year, but for now big jumps on the FOB values on basis due to the gulf issues, wheat maybe pricing itself out of the export picture to make room for corn and beans at other ports. Having said that if the port shutdowns are back online sooner, the market could quickly recover this week’s losses. Two big reports next week with crop conditions on Tuesday evening and the USDA WASDE next Friday at 11 am. The trade will get updated estimates on  whether the 2021 crop is getting bigger or smaller in my view. The June lows for beans and corn are at 5.07 and 12.41 respectively. Those will be downside targets should pressure to the downside remain fro Dec Corn and November beans in my opinion.

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Sean Lusk

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