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| Grains under pressure following yesterday’s optimistic price action, as soybeans give back their gains while corn made new lows. Wheat was red for the 16 time in 18 days.
We failed to follow through technically from yesterdays nice signs of a potential reversal.
Rain makes grain is still the thought process on the markets. With some of those rains moving into the eastern corn belt.
It’s the end of June. Rain in the forecast is gonna push prices lower despite any flooding concerns. If it’s hot and dry the markets going to go up. Right now those rains are moving east to the areas that have missed rain for a while.
Fridays USDA report could be the biggest of the year.
Remember last year when we saw corn down -30 and beans +70.
All the talk right now is bearish. Is priced in?
First the stocks. There is a reason old crop beans have gained +50 cents on new crop beans. Because the farmer doesn’t have them for sale. So maybe we see stocks somewhat friendly, but we all know the USDA might not be so fast to admit that.
If acres come in high, we will struggle. Estimates for are right above 90 million vs last years 94. The range is 89-91.3. For beans the range is 85.5-87.5
Traditionally corn acres do go up from March to June.
But it doesn’t feel like we had that spring that allowed producers to go balls to the walls. Prices have been weak, so it doesn’t feel like we had that motivation. Insurance prices didn’t say go plant everything you can. There just isn’t many reasons for farmers to have planted a ton more corn. Longer term I think we’ve lost acres.
Where we come in for acres will determine how important weather is. More acres means weather is less important. The less acres the more important the weather will be for the market.
Often times you have to ask what the market is least expecting. No one is expecting something around 88 for corn or a number like last years for beans.
The biggest risk is of course if both acres come in higher. We could see a lot lower prices.
This year has been anything but a typical year. So often times, what is going to happen is the exact opposite of what everyone thinks is going to happen. We didn’t rally after that Dec report like we did the past 16 years in a row. We didn’t get a real weather rally this summer like we usually do.
Everyone is expecting these high soybeans acres. But keep in mind the last 5 years in a row, the soybean acre estimates have been way too high.
The funds are the 2nd shortest they’ve been for this time of year. Does that mean we have to go higher? No. But that tells me we probably have a counter seasonal rally coming.
For those of you that sat around for this seasonal rally we didn’t get, you have two options. You can be patient and ride out the storm. Or puke sell. I’m not puke selling.
I think we see a counter seasonal rally led by demand. Overall demand for corn has been getting better year over year. We have a chance to get a record yield but see our carryout decrease. Now that’s not bearish. When the funds realize that, it’s game on.
Now will we get that opportunity? We always want to price stuff when you don’t know what you are going to raise. We didn’t have that scare like we normally do. The next thing to look for is a demand driven counter seasonal rally. The best thing about a demand driven rally is it lasts. Unlike the supply driven rally we just saw in wheat.
Demand increased year over year. All of the sudden the yield isn’t there. The sloppy spring. Wet in areas, dry in others. That’s a recipe for a potential longer term demand driven rally…
For those interested, you can listen to todays audio where we go over all of this in more detail here: https://txt.so/ghrOk6
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Biggest USDA report of the year in 3 days - market comments
