Category: Grain Commentary

Corn and soybean prices rebounded from their contract lows yesterday on strong fund buying. December corn had a double-bottom at $3.62 ½ before closing 6 ½ cents higher at $3.70 today. November soybeans closed 23 ¼ cents higher at $9.27 ½, and December wheat down 1 ½ cents at 5.08 ¼.

Crop ratings were down slightly from last week and heavy rain has become a concern for parts of the Midwest as some bean acres are sitting unplanted for now. These concerns may have been enough to get the funds to lighten up their short positions especially with the June 30th report just around the corner. Looking back to the 2012 growing season, this was virtually the same time when prices bottomed and turned higher for the summer …

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Corn and soybean prices rebounded from their contract lows yesterday on strong fund buying. December corn had a double-bottom at $3.62 ½ before closing 6 ½ cents higher at $3.70 today. November soybeans closed 23 ¼ cents higher at $9.27 ½, and December wheat down 1 ½ cents at 5.08 ¼.

Crop ratings were down slightly from last week and heavy rain has become a concern for parts of the Midwest as some bean acres are sitting unplanted for now. These concerns may have been enough to get the funds to lighten up their short positions especially with the June 30th report just around the corner. Looking back to the 2012 growing season, this was virtually the same time when prices bottomed and turned higher for the summer …

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Grains finished higher on Thursday without a clear, market-driving headline behind the move. The weakness in the Dollar contract was likely a major catalyst. Also, the market has been coming off of an oversold situation which means many of these buy orders could be for technical reasons.

We maintain that now is a good time to be purchasing call options against previous hedges. There are a number of reasons we believe the market may have found a level of support. Many analysts have started to get bearish, old crop corn is starting to move, the dollar has started its fall from the highs, and higher end federal crop insurance policies could be close to paying out a revenue claim at normal yields.

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November soybeans fell below $9.00 for the first time today but managed to settle at $9.02 down 4 ½ on the session. December corn was up 3 ¼ cents at $3.70 after failing to take out the contract low. July wheat was up a penny at $4.88 ¾.

This is that lull point in the year when most of the acres have been planted and the timeframe for a spring weather event has already passed. Grains have been testing and making fresh contract lows recently which is likely the result of the heavy hedge pressure from all of the un-priced bushels held into the spring. Historically it is not common to make a bottom in June but if we get too cheap this may be the year that the market bucks the seasonal trends. If you consider producers that are holding onto 85% federal crop insurance policies for corn, AND have an actual production history (APH) that matches what they expect to grow, there really isn’t much downside price risk.

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November soybeans settled at a fresh low of 9.19 ¾ on Wednesday. July soybeans are still flirting with the contract low at 9.35 ¼. The majority of open interest lies in the July contract so if this level is breached that would probably be the best chance to see stops trigger an accelerated move.

Our opinion on beans remains the same. We believe that the US and World carryout levels are rising at an aggressive pace and prices are not fully reflecting the supply glut. The strong US Dollar Index has also put the US export market in a less competitive situation. The new crop corn-bean ratio is still at 2.44 to 1. After planting is over this ratio will have less of a reason to hold within a boundary and focus will shift more toward weather in July.

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Was it the rumors of higher wheat prices in Russia or quality concerns in the US that caused the massive 32 ¾ cent rally in July wheat today? Or could it be the fact that the funds are net short a record amount of contracts? We most likely would not be getting these types of moves if they weren’t short such a large portion of the open interest.

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December corn settled 2 ½ cents higher at $3.78 ½, November soybeans 3 ¾ cents higher at $9.34 ½, and July wheat up a penny at $4.81 ½. The US Dollar Index was down 0.956 at 93.65. At one point in the trading session wheat was down 9 ½ cents but it staged a sharp rally into the closing bell.

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December corn settled 3 ½ cents higher at $3.82 ½, November beans up 1 ½ cents at $9.56, and July wheat up 12 ¾ cents at $4.79 ¼. The US Dollar Index fell 1.017 points to finish at 94.185. This was a fresh low for the Dollar going back to January 22nd which probably triggered some funds to exit their short wheat positions especially since it is at/near contract lows.

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December corn settled 1 ¼ cents higher at $3.79 after touching a new low for 2015 at $3.72 ¼. As a reminder the previous contract low is $3.65 from October. November soybeans settled 5 ½ cents higher at $9.54 ½ and July wheat posted a new contract low and settled at 4.66 ½ down 6 ¼.

Wheat prices are suffering again from favorable conditions as well as the idea that Russia will soon remove the export tax.

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