China is still a consumer and it’s probable that they buy corn and beans from someone in this world. Might be US origin or might be South American. Regardless, the prices are right for usage and someone is going to make the trade!
How do the funds get out of their short positions? Farmers are the long and there might not be enough bin space around this harvest if we enjoy another solid corn and bean crop but, the stage is set with planting delays for corn for space to comfortable this Fall. Old crop stocks are ample and basis may stay weak for a couple of months but, as we get to pollination and approach harvest attitudes may shift and spreads may show signs of life.
We will start hearing about winter wheat harvesting in the Southern Plains and Deep South next week if Mother Nature cooperates and gives us a string of dry days. We’re still a few weeks away from the solid stuff in North Texas and Oklahoma and traders are sensing that we might get lucky and have a good quality crop. Time will tell! Funds are short and farmers are long and at these values it’ll be difficult to pry title to the grain away from the farmer. Yet, space might be an issue and that allows for the basis and spreads to weaken.
Corn might turn dear this Fall and wheat quality is still to be determined but beans are everywhere and there’s no urgency to own flat price or spreads. Beans could be the last chance crop to plant this year and until the weather turns drier rallies could be rare.
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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