Commentary
It is my belief that corn futures extended overnight declines and sank to nine-week lows on spillover from a selloff in wheat, strong U.S. planting progress, and a generally favorable weather outlook for crops. USDA late yesterday said 86% of the U.S. corn crop was planted as of Sunday, up from 72% a week earlier and just one percentage point behind the five-year average. Progress slightly exceeded analysts’ expectations, which averaged 85%. Wheat futures fell sharply overnight, and corn also declined following reports over the weekend that Russia may allow grain shipments from Ukraine. Russian President Vladimir Putin said his country was ready to facilitate the unhindered export of grain from Ukrainian ports in coordination with Turkey, according to a Kremlin readout of talks with Turkish President Tayyip Erdogan. In my opinion the Ukrainian grain export story could be setting up as a sell the rumor/buy the fact event. In my view the operational nature of the various proposals are a nonstarter without a lot of cooperation from both sides which are very much in a war. I don’t see a relaxation of sanctions given that the US government facilitating another $700 million in cash and weapons systems into the Ukraine last week. Just my opinion, but given the recent break in price, I am looking at a spread in wheat versus corn. The chart looks like it may trade back to the 50 percent retracement from the high/low for the year. There is also a gap at 3.50 December 2022 Chicago wheat over December 2022 corn. If the spread trades down to that level, where to from there? In my view It may depend if managed funds see no progress on talks next week regarding the potential movement of Ukrainian grain through Turkey. I included a chart on December Chicago wheat vs. December Corn below, with no trade recommendation on this post.
Trade Ideas
Futures-N/A
Options-N/A
Risk/Reward
Futures-N/A
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