MARKET UPDATE

Futures Prices Close

Overview

Grains heavily pressured across the board today with the exception of KC and Minneapolis wheat as they continued to be supported by the slow planting progress and poor crop conditions.

Both corn and beans gave back roughly 50% of our recent rally with today’s heavy losses. KC wheat on the other hand continues it’s bull run for the 5th trading day in a row, up nearly $1.20 from the lows last Wednesday.

The big news this morning which had corn under pressure was the USDA reporting yet another flash cancellation of corn to China. This time cancelling 272k metric tons, making it the 3rd cancellation since April 24th.

Yesterday we got crop progress and conditions (Full data at the end of today's write up). But the main takeaways there were that both corn and beans are running ahead of pace which didn’t help prices today, while spring wheat is falling very far behind. Coming in at it’s 4th slowest pace ever. Winter wheat conditions also saw their poor to very poor rating increase another 2%. Now sitting at 44% rated poor, which is the worst for this week since 1996 and the worst for any week since 2014.

Planting Progress

Bean 35% vs 21% average
Corn 49% vs 42% average
Spring Wheat 24% vs 38% average

North Dakota had only 1% of corn planted and 0% of beans planted, and they are expecting more rains which could further delay planting.

We have some dryness in the Candian plains, as people are starting to watch this a bit more.

Russia looks like they are pulling the plug early on the grain agreement. But this didn’t seem to provide any support whatsoever. With the funds so short corn and wheat, we could see a quick snap back if Russia decides to do something unforeseen or we get a weather scare. But this week comes down to the funds positioning ahead of the report and what we actually get from the report.

Today's Main Takeaways

Corn

Corn takes it on the chin today, as we gave back roughly half of gains from our recent rally. As corn closed down nearly 12 cents on the day.

As mentioned, the big thing today that added some weight to corn futures was yet another cancellation of Chinese corn sales. This is now the 3rd one in a little over 2 weeks. This was the main thing that started the lower price action across the grains.

Some are saying that the recent cancellations could up our carry-outs on the corn market on Friday's report.

We mentioned this yesterday, but the commitment of traders Friday showed the funds were heavily short corn. As they sold over 100k contracts last week, making it just the 4th time they've done so over the course of a week. As they now hold their shortest position since August of 2020.

So my biggest question there is, do the funds really want to be that short as we are heading into a growing season with a ton of potential wild cards left in the deck? That is a lot of volume to unload if we get a weather or war wild card.

Looking ahead of the report, with them being so short one would think they possibly look to off load such a short position ahead of the report.

Bulls continue to look at the obvious concerns in Ukraine and Russia which could ultimately wind up providing support. But then again, this is a big if, as no one knows what is up Russia or Putins sleeve.

Crop progress came in a tad hotter yesterday. Fast pace was expected, so this wasn’t anything surprising but definitely didn’t help prices out today. As total planting came in at 49% complete vs our average of 42%. Keep in mind, fast planting is an indicator that it is dry. We still think the markets will look at the drought card later this year and summer, and that alone could very likely be the catalyst that pushes us higher.

We will provide estimates for the USDA report later this week, but we don’t want to be surprised if we do indeed get a slightly bearish report. If we do, expect some short term downside. But I think the break will be bought right back up soon after if we do.

Our current outlook is still that we believe corn will make its lows sometime near the end of May. Could be a little sooner, could be a little later. Only 1 time in the last 2 decades has corn made its highs in January. I have a hard time believing this year will be the second time.

Keep in mind, we don’t have a whole lot of weather premium built into these markets just yet with an entire growing season ahead.

Corn July-23

Soybeans

Beans hit the hardest on today's lower price action. As July loses 19 1/2 cents at close.

Funds are starting to trim their long bullish position, as possibly looking to create a more neutral position ahead of Friday's big report.

One of the biggest things bears continue to look at….

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Included In Today’s Write Up

Is this fast planting actually bearish?
Taking a look at drought and history
Long term factors that support beans
What is KC wheat’s ceiling?
Takeaways for beans and wheat

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