MARKET UPDATE

Futures Prices Close

Overview

Corn & wheat hang on and end the day green while soybeans continue to sell off following yesterday’s blood bath. Today new crop Nov beans fell to new 3 year lows. Yesterday both corn & beans posted their worst single day losses in over a year.

The culprit for the recent heavy sell off?

First is the hurricane.

It is pushing timely rains up into the eastern corn belt. Illinois, Indiana, Ohio, and Michigan are all going to get good rains. These were the areas that were suffering from dryness.

These are the EXACT areas that needed rain.

I circled the exact same area in the forecast & drought monitor.

It is cool for a few days, then we have some heavy heat coming but the market doesn’t care. All they care about is the rain.

Crop Conditions

The trade was expecting no changes from last week, but both corn and beans improved +1%.

We saw improvements across the board.

These are the best crop ratings since 2020.

Right now, these numbers suggest a trendline crop. HOWEVER, in a wet year like this one, crop conditions aren’t always perfect. Again, these are essentially an eye test. An eye test can’t determine the effects from wet planting, nitrogen loss, root structure issues. These issues pop up later.

But for now, this is what the market trades and it is not bullish today.

Chart Credit: Darrin Fessler

Just for comparison, since everyone is nervous this is a 2014 repeat. Here are comparisons of crop conditions from 2014 and 2010 vs today.

Yes we have great conditions today, but they were far better in both of those years.

Chart Credit: JP Gieseke

The Funds

Next is the funds.

They continue to hammer their selling.

COT data came out yesterday. The funds are short -350k contracts of corn. Which is an all-time record. This number is even bigger today.

Now no they do not historically stay this long for very long, but they are just riding the wave. We will need a shift in supply or demand to change their minds.

When they do cover, it is a massive amount. But there is no telling at what price levels they will decide to do so.

Chart Credit: Standard Grain

Something else to point out, in 2014 the funds were long the entire year. The funds are record short in 2024 and haven’t came close to being long.

We have also never seen the funds not get long at some point during a year. 2024 would be the first if they do not.

Chart Credit: Karen Braun

Farmer Holding

Along with the funds we have the US farmer holding a massive amount of grain.

This is one of the biggest problems we have.

Yes we have rain and the USDA says we have a big crop, but the 3 billion in stocks is the biggest long term issue.

In all reality if you compare the numbers, the farmer holding too much grain is a heavier negative effect than that of the funds.

The funds are short 350k contracts (1.7 billion corn bushels)

The farmer is holding 600k contracts (3 billion corn bushels)

Nearly double what the funds are short.

Another way to look at this is:

Does it really matter if there is all this grain out there if it is not for sale? At a certain point, buyers will have to pay up if farmers refuse to sell. Not many want to sell grain for a loss. But currently the market thinks all of this will have to be sold.

Today's Main Takeaways

Corn

Right now, a weather scare rally is probably off the table for this summer. Typically that window closes about a week or so from now.

The biggest concern long term is

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IN TODAYS UPDATE

Biggest concerns
Will low prices create demand?
What should you do?
2010, 2014, & 2020 comparisons
Historical support levels for corn & beans
Funds + open interest record
Meal crashes. Gift for end users
Main takeaways for each grain

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Check Out Past Updates

7/8/24

RAINS, RECORD FUND SELLING & 2014 COMPS