BEANS COLLAPSE
Overview
Grains pressured across the board, as soybeans led the grains lower, getting hammered by nearly 40 cents. This came after yesterday's strong price action where wheat led us higher following their bullish report Friday.
The main pressure in beans came from the fast planting in the crop progress report yesterday, as well as some poor economic data coming out of China this morning. The lack of fresh bullish news also didn’t help bulls today.
Planting showed corn at 65% planted vs the 59% average. If we take a look, it's the "I states" that are ahead of pace. Which is an indicator that it is very dry across the corn belt.
Beans are well ahead of pace, coming in at 49% vs the average of 36%. This is their 4th fastest pace since 1980.
Wheat conditions did slightly improve, but were nothing to write home about. As good to excellent ratings remained at 29%, while poor to very poor went from 44% to 41%. However, our top grower of Kansas did slip again, as they still sit at just 10% rated good to excellent.
Spring wheat planting is still well behind schedule. Coming in at 40% planted vs our average of 57%.
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In case you missed it, check out Sunday's Weekly Grain Newsletter where we went over the USDA report and the garbage assumptions. Read Here
Crop Progress & Conditions
Corn 🌽
Planted: 65%
Trade: 68%
Last Week: 49%
Last Year: 45%
Average: 59%
Beans 🌱
Planted: 49%
Trade: 51%
Last Week: 35%
Last Year: 27%
Average: 36%
Spring Wheat 🌾
Planted: 40%
Trade: 39%
Last Week: 24%
Last Year: 37%
Average: 57%
Chart Credit: GrainStats
Winter Wheat 🌾
Good to Excellent: 29%
Last Week: 29%
Last Year: 27%
Poor to Very Poor: 41%
Last Week: 44%
Last Year: 41%
Today's Main Takeaways
Corn
July corn ends the day down 11 3/4 cents, giving back all of our gains from yesterday.
Planting for corn continues to move along fast, as we came in at 65% planted. Which is a jump from last week's 49% and is 6% higher than our 5-year average pace of 59%. On the surface, sure one could look at the fast planting to be a slightly bearish factor. But we have to remember, fast planting means it’s dry. Drought is still a very real concern the corn belt is facing. Just take a look at the states that are running ahead of pace. It’s the "I states" of Iowa and Illinois.
With all of the hard red winter wheat production issues we've seen and less being used in feed rations, this leads bulls to make the argument that more corn is going to be used.
Bears on the other hand still look at Brazil as a negative factor. As their crop appears to be getting bigger, but then again if you read Sunday's right up, we pointed out that a large portion of their second corn crop was planted too late, and a lot of areas that have gotten rain is in very sandy soil. If you take a look at their current forecast, it’s pretty dry.
Which leads to another argument that the USDA may have jumped the gun on raising their Brazil estimates. China might eventually get burned from canceling those sales if the corn belt remains dry and Brazil remains dry.
The more and more we continue to look at and compare this year to that of 2012, the more we continue to realize the similarities. In 2012 we were essentially done planting towards the back end of May. The trade didn’t realize the drought issues we were facing until late June. This year could very easily be a similar story line, as the funds are undervaluing weather premium and drought in our markets. We still don't have much if any weather premium built in.
The funds are holding a massive short position of over 100k contracts of corn going into an entire growing season. Will they really want to hold that big of short with all of the potential wild cards and weather concerns that we could very easily encounter over the course of the next month or so?
Below is a few weather maps. The first is past precipitation, and the other two are forecast precipitation. Just take notice of the "I states" and the corn belt.
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Technical Analysis Audio
Here is an analysis from Vince, where he talks about dates where we might see reversals & highs. As well as our reversal pattern still being in place.
Corn July-23
Soybeans
Soybeans collape today. As July beans close down nearly 37 cents, trading at our lowest levels since August.
One of the biggest reasons for the downfall in beans today was….
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Included In Today’s Update
Outlook for beans & wheat
Biggest things weighing on bean market
Will we fill gap lower on beans
Short term & long term bean outlook
Bullish factors in the wheat market
Why I wouldn’t be short wheat here
Check Out Past Updates
5/15/23 - Audio
If You're Short Wheat.. Be Ready to Sleep On Street
5/14/23 - Weekly Grain Newsletter
USDA Garbage Assumptions
5/12/23 - Report Recap Audio
USDA Confirms Horrible Wheat Crop, Plays Games With Corn & Beans
5/11/23 - Pre-Report Market Update
Grains Pressured Ahead of Report
5/10/23 - Audio