6.24.22 Market Commentary

 

 

This week’s action:

Corn July down 35 @ 7.50

Corn Dec down 58 @ 6.74

Beans July down 93 @ 16.09

Beans Nov down 1.12 @ 14.25

KC Wheat July down 1.11 @ 9.93

Feeders Aug down .70 @ 172.375

Fats June down 2.32 @ 135.60

July Hogs down .05 @ 110.825

Aug Crude down 1.52 @ 107.36

 

 

Seasonal Averages:

Dec corn Feb 1 – today: $6.81

Dec corn since Russian invasion: $6.98

Nov beans April 1 – today: $15.04

July KC wheat since Russian invasion: $11.30

 

**We are about 90% through a typical corn seasonal sales time frame with about 15 days remaining.

**We are about 55% through a typical bean seasonal.

 

Recap:

It was a tough week in Chicago as less threatening weather forecasts triggered long liquidation forcing new crop markets to move sharply lower. While we are long way from putting the crop in the bin, we went from threatening short term forecasts to less extreme heat and more normal precipitation. Globally, palm oil is down almost 30% over the past month. This has helped pressure soybean prices in the US. For the market to continue it’s recent down trend, the forecasts need to remain damp through the next two weeks, with measurable rain totals throughout the corn belt.

Old crop corn basis continued to rally this week amid a 75 cent sell off from spring highs and farmers still completing field work. If your end user has not yet rolled their bid to September futures, I would expect them to do so early next week. Make sure to keep an eye on the new bid. The inverse from July to September futures has been a moving target but closed the week at 67 cents. For the new bid to be “equal money” to the old bid, it needs to be about 67 cents higher vs. September futures than last posted vs. July.

Managed money began the week long about 265,000 contracts of corn and about 155,000 contracts of corn. Many analysts are reporting a big reduction in fund longs this week. Next Friday’s Commitment of Traders report will be noteworthy.

 

Forecast:

 Lite, scattered showers expected. Attention has turned to soil moisture levels in many areas.

 

Outside Markets:

The Fed raised rates last week to its current range of 1.5-1.75 percent. Many within the Fed expect rate increases to continue to about 3.8%, or double what they are now, by the end of 2023. Concerns are mounting the Fed will tighten credit too much and cause a recession. Goldman Sachs estimated the odds of a recession this year at 30% and at 48% over the next two years. Mortgage applications and home sales have hit a screeching halt as home prices have yet to reflect an increase in mortgage rates. The national gas average is $4.93 (down .07 from last week) with Nebraska’s average at $4.74.

Despite this, the stock market had a good week with the Dow up over 5% at 31,500 and the S&P up over 3.5% and closing in on 4,000.

“Economists have predicted 32 of the last 4 recessions.” – Chinese Proverb

 

Something that Probably Means Nothing:

The June 30 stocks and planting report is this upcoming Thursday.

According to RJO’Brien analyst Richard Feltes:         

            June 1 corn stocks above estimate 7 of last 11 years

            June 1 bean stocks below estimate 7 of last 11 years

            June US corn area above estimate 7 of last 11 years (5 of 7 by 1-3 million acres)

            June US soy area below estimate 9 of last 11 years (5 of 9 < 0.2 million acres)

 

Enjoy your weekend!