There’s a lot of growing season left and given the lesser acreage for corn, problems with wheat and declining yield potential for soybeans we might anticipate cautious end user buying on any significant dips. yet, there’s no reason to chase a rally unless we start part 2 of the weather market of 2019 and that might come from extreme hot and dry over the next 6 to 8 weeks and/or extreme cool and wet and a lack of growing degree units. And, believe it or not, there are traders already looking at analog years when we had an early frost. When it rains, it pours!
We are walking into some major reports next Friday as well as the end of the quarter, first notice day on the July futures. The USDA will issue the Stocks-in-all-Positions report as of June 1 as well as acreage revisions. It’s the government and anything goes and we always preach the Gospel of going into reports as even and open minded as possible. This is a big, big, big acreage number for corn given the acreage losses. We sense that there might be a little argument over the figure and the trade might not get an accurate figure until the final figure in January.
Spreads have come back to life as there’s arguments over stopping corn, beans and wheat as eastern basis levels have jumped because of the fear and anxiety caused by the planting delays and abandonment. Taking delivery and moving the receipts is not that easy! Also, if it made sense then the deliverable elevators would be taking back their hedges and making money themselves. There’s also the talk of the feasibility of beaucoup bushels of South American origin working up to the Eastern Seaboard. And, on a pound for pound basis wheat is cheaper than corn. Yet, bull spreading has a little less risk than bear spreading and we sense that the markets are flattening out this winter and that’s shown by CH, SH and WH strengthening. The South American planting and growing season has taken on increased importance given the problems in the US.
The USDA Monday afternoon progress report and then the Friday figures will be important next week.
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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