It was a wildly mixed week at the Chicago Board of Trade. The week’s trade was highlighted by the wheat market. After starting the week by making new contract lows, the July wheat contract rallied over $1, managing to close $.98 ¼ above last Friday’s settlement price. The rally was initiated by growing production concerns both in the U.S. and overseas.
Domestically, the Kansas wheat crop continues to suffer from heat and dryness. Last week’s U.S. condition rating slipped 3% last week with another 3% decline expected next week. The wheat market also found support from crop concerns in Russia and Europe. The rally was so steep due to the near record short position held by the funds in the wheat market.
Crop concerns are also beginning to appear in the corn market, as the heart of the Corn Belt is on the verge of recognizing its 7th straight month of above-normal temperatures. In addition, at least one weather model has discussed the presence of an "extreme ridge" for the Midwest. This will be closely monitored next week leading up to the Memorial Day weekend.
The corn market will continue to be buoyed by a strong wheat market as it competes to ration its supply with the higher priced wheat.
The soybean trade was disappointing this week with November soybeans closing over $.30 lower for the week. The market emphasis this week was on expectations for higher soybean acres due to the spring price rally as well as the potential for a large amount of double-cropped acres.
Next week will bring the first crop ratings of the year for the U.S. corn crop. They should challenge some of the best on record for this time of the year. Next week will also bring with it longer trading hours, as the new 21-hour a day schedule begins Sunday at 5 p.m. CST.
We increased corn sales on the late week rally and will continue to add to sales as prices approach $5.60. New-crop soybean values are at the bottom of our expected range. No hedges will be recommended until soybean values approach $13.50. Weather will be the driving force for the rest of the season.
Click for larger image.