7.15.22 Market Commentary

This week’s action:

Corn Sep down 28 @ $6.04

Corn Dec down 21 @ $6.04

Beans Aug down 46 @ $14.97

Beans Nov down 54 @ $13.42

KC Wheat Sep down 1.09 @ $8.38

Feeders Aug up 4.50 @ 176.35

Fats Aug up 1.00 @ 134.925

Aug Hogs up 1.00 @ 109.825

Aug Crude down 10.00 @ $94.50

 

Seasonal Averages:

Dec corn Feb 1 – June 30: $6.80

Dec corn since Russian invasion: $6.86

Nov beans April 1 – today: $14.81

Sep KC wheat since Russian invasion: $10.95

 

Recap:

This week had something for everyone. The market shot out of the gates Sunday evening on hot/dry forecasts. Since the fury Sunday night, the row crop markets have cooled significantly. New crop corn closed over 50 cents from its $6.58 high. November beans closed 96 cents below its high of $14.38 and September wheat closed a whopping $1.60 below its $9.98 peak. Crop conditions were reported at 64% good/excellent in corn vs 65% last year, while soybeans rated 62% good/excellent vs 59% last year. Tuesday’s WASDE Report was uneventful. Hedge funds are reported to have cut 55,000 contracts of length in corn and 20,000 contracts in soybeans as macro headwinds are looming. The Sep/Dec corn inverse has gone from 15 cents to flat the last two weeks, meaning the market is getting comfortable with the idea we have enough corn on hand until harvest. Basis levels are beginning to cool off. If you have old crop corn left, plans need to be made.  

Historically speaking- it is difficult to have a meaningful December corn rally at this point in the year. The market may soon decide to wait for the farmer to “prove” production failures, which will not be “known” for a couple months.

 

Forecast:

It’s been a burner lately and forecasts keep heat around awhile longer. Scattered showers are forecasted for the Eastern corn belt over the next 5 days.

 

Outside Markets:

Many analysts are now believing the FED will raise interest by 1% later this month, which is a very aggressive maneuver historically. Such a move hasn’t been since 1981. Oil continues to soften as we briefly traded front month oil to $90/barrel this week. That’s its cheapest point since March. The national gas average is $4.58/gallon, which is about 40 cents cheaper than a month ago. Farmers are rioting in The Netherlands over livestock carbon emissions and people in Sri Lanka are rioting to protest food inflation. Their food costs have increased 180% year over year as their government is trying to push towards organic farming practices, thus far resulting in much lower production. This has led to the resignation of their President.

 

Something that Probably Means Nothing:

Kansas City wheat is off 40% from its mid-May high. A similar move in corn and soybeans equates to $4.60 and $9.50.

 

 

Enjoy your weekend!