SELL OFF CONTINUES DESPITE FRIENDLY FORECASTS
Overview
Grains hammered again despite what most would consider somewhat bullish weather forecasts.
Sell off was led by technical and fund selling in soybeans & wheat, as the charts continue to fall apart and turn bearish with wheat breaking below $6.00. The funds are already heavily short over 200k contracts of corn, hence more weakness in the beans & wheat.
We also saw sharply lower Russian wheat cash prices continue to drive wheat lower. Wheat is now -$1.10 off of it's highest close.
Despite a record May NOPA crush, soybeans seeing some pressure from Brazil's new export tax change being temporary put on hold.
The charts are all looking weak, with this the funds and algos continue to hit the sell button. As the funds are now once again heavily short across the board.
Looking at the weather, currently the western and NW corn belt is being hit with HEAVY rains across Iowa, Nebraska, Minnesota, South Dakota, Wisconsin, and northern Kansas.
On the other hand, the eastern corn belt from SE Iowa to Ohio is looking very dry.
On top of this, the entire corn belt is expected to see some massive heat, with many areas 10 to 15 degrees hotter than normal.
These forecasts do actually look pretty friendly when looking at how dry and hot the eastern corn belt will be.
Here is some weather info from BAM Weather.
They are calling this weather pattern the "Ring of Fire".
The Ring of Fire is an area of thunderstorms that circulate clockwise around and area of high pressure. Creating a heat dome.
Around the outside of this dome there will be those wild thunderstorms that come with rain and wind.
Inside the dome it will be very hot and very dry. In this case, the dome is over the eastern corn belt.
Here is an example of what that looks like:
They said this dome will likely have a brief relax late June, but will come back quickly into July.
"Right back to excessive heat by July 1st. I think July 5th to 15th could be record heat for the grain belt with risks for several 100+ degree high temp days."
If you take a look at these upcoming daily high temps, every white circle indicates a record temp for that day.
You can check out their weather info at bamwx.com.
However, the markets don’t seem to concerned yet. As they seem to think the crop is made. However the……..
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In Todays Update
Crop conditions
Illinois drops -10%
1-2 weeks can change a lot
Charts look awful, but weather trumps technicals
Weather scare?
China drought
Beans & wheat approaching key levels to hold
Wheat will need a Russia headline
Risks & managing
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