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Market thoughts by Marc - June 9 '17


For the week ending 6/09/17
Corn – Up 15-cents            Soybeans UP 20 ¼ - cents        Mpls Wheat up 22 ¾ - cents
Crude oil down $2.89 –Bbl.       S-P 500 Down 7.25 - points          US Dollar up 57 points 


6 /09/17
July corn 387 ¾ + 2                 July Soybeans 941 ½ + 3 ½        July Mpls wheat 606 ½ + 2 ¼         
Sept corn 395 ¾ + 2 ¼              Sept soybeans 945 ½ + 3 ¾             Sept Mpls wheat 611 + 2 ½   
Dec 17 corn 406 + 2 ¼            Nov17   Soybeans 948 ¼ + 4 ½      Dec 17 Mpls wheat 608 ½ + 2 ¼ 


So what do the Gurus think about Friday’s USDA report?  (Numbers at the end) 


Here is what Rich Feltes from RJO had to say:


Corn: Our (RJO) 9/18 US corn carryover of 1.669 bil bu assumes 1.0 loss in corn intention and a 167 BPA yield. Nearly 400 mil bu cut vs. USDA in 2017 production cushioned by expectation for 125 mil bu lower 2017/18 exports. 3.7 BPA lower corn yield than USDA (down 2.17% vs. trend) may be conservative given delayed germination and above normal replant in eastern Midwest. Corn market likely stays well supported until weather improves. 


Soybean: Our (RJO) 9/18 US soy carryover of 555 mil bu assumes 0.5 mil more planted area than USDA and a slightly smaller (-25 mb) 17/18 US soy export forecast than WASDE. No evidence as yet to support a below trend 2018 soy yield that could still advance under favorable growing conditions starting with moist soils for D-Crop soybean planting. Unlike the grains—new crop US soy carryover is poised to increase over 9/17’s already historically high level. Soy market will be the 1st to flounder once grain rally stalls. 


Wheat: Our (RJO) 6/18 US wheat carryover forecast assumes a below trend 45.5 BPA all wheat yield and 75 mil bu lower 17/18 exports than WASDE. Nothing bullish about a +900 mil bu wheat carryover (and associated 42.7% stks/use ratio) if achieved. Nonetheless, there is a risk that 2017 US wheat production could erode further if HRW yields are below expectations and/or adverse N Plains weather returns late June onward. Interesting to note NASS using 2nd higher wheat head weigh ever which is inconsistent with reports of low TW on early harvested wheat. Recall that seasonally wheat typically bottoms mid-June.


As might be expected the weather will take center stage again. At least until the USDA releases its next acreage and stocks estimates on June 30Th. 


Weather forecast looks slightly negative with the 5- day Midwest precipitation coverage of 80%/65%. The Midwest heat is forecasted to moderate after Wednesday. Suspect trade tonight will focus more on surge in last week’s farmer selling than weather. Look for stable to lower markets tonight given the rain events over the week and the sizeable rally last week.   Hummm - Everybody gets a guess. 


So what did BIG Money do last week? 


According to the CFTC Commitment of Traders Disaggregated report, the funds reduced their short position in Corn by of 62,000 contracts.  This still leaves them still net short 136,758 contracts of corn.  They increased their short position in soybeans by just over 6,000 contracts. This leaves them with a net short position of 94,737 contracts. They decreased their net short position in Chicago wheat, but are still short over 106,000 contracts. They almost doubled their long position in Mpls Spring wheat and are now long just under 10,000 contracts. 


On Monday the Trade is looking for the nationwide conditions for corn to 1-2 % down and be around 68% GD/EX. spring wheat ratings are expected to decline 1-3% in the GD/EX category. The 1st estimate for beans is expected to be 65-70% GD/EX. Hummm pretty big range. 


Weekly Continuation Chart of Corn 
Corn prices closed at their highest levels since July of 2016 and above the previous high close of 3.81 from back in March.




July corn 

Last week prices reached the first target zone of 3.88 -9.92.




Weekly Continuation chart of corn using the December Contract Only.

Prices closed above the 4.00 level. This also the highest close since July of 2016. 





December corn chart 

Prices closed above the 402 level, which now is support.  The next target is 4.17 – 4.18.