Soybeans started out strong Sunday night and carried the strength right through the close of the day session. August soybeans led the charge closing 29 ½ cents higher. August meal was lock-limit up $20 and limits will expand to $30 tomorrow. Despite the strength in the oilseeds, corn and wheat both closed lower. Much of Iowa missed the rains over the weekend but cooler temps and a more favorable 7 day outlook has kept a lid on corn prices. The midday outlook took some rain out of the second week outlook which was also supportive for soybeans.
Crop ratings were released at 3:00pm CST. The market was expecting an overall drop in corn/soybean ratings of 2-3%. Corn was down 3% as expected and soybeans were down only 1%. That means corn’s good-excellent rating is 63% and soybeans is 64%. For corn the most notable areas of decline were Missouri, (down 9%), Kansas (down 9%), and Nebraska (down 5%). Overall the ratings were in-line with the market’s expectations for corn and better than expected for soybeans. Winter wheat is now 75% harvested which has had a very quick comeback to bring us back to an average harvest pace. Spring wheat’s crop ratings were down another 2 percent at 68% good-excellent.
The market is still trading in a weather-based, choppy pattern. Crop ratings have declined slightly for both corn and soybeans but the national average yield isn’t expected to drop low enough for corn to bring carryout to a tight situation next year. If soybean yields drop and the USDA demand estimate is correct we can see how a tight situation could develop. However, we still believe a 10 MMT increase in Chinese imports year over year isn’t likely, especially at current prices. We also have to compete with a record South American soy production. Soybean demand is overstated in our opinion and the corn-bean ratio of 2.58 is on the high side as well. If we get to August 1st and rains are adequate we could see this spread come back in-line very quickly. For now we want to remain well hedged going into harvest using a combination of cash sales and options. To sign up for a free trial of our market letter including hedge recommendations, click here.
Premier full service commodity brokerage offering risk management services for the agricultural sector as well as professional traders.
Trading commodity futures and options involves substantial risk of loss and may not be suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. You may not place an order to buy or sell commodity futures contract by e-mail. The market information contained in this message has been obtained from sources believed to be reliable, but is not guaranteed as to its accuracy or completeness. Market information may not be consistent with current or future market positions of EHedger LLC, its affiliates, officers, directors, employees, or agents. EHedger LLC will not disclose anyone's position due to their confidential and proprietary nature. Recipients assume the risk of reliance on and indemnify and hold EHedger LLC harmless for any and all losses, costs, or tax consequences incurred as a result of their use of market information. The contents of this e-mail message and any attachments are intended solely for EHedger LLC's customers and brokers. This communication is intended to be and to remain confidential. Any duplication or distribution without the express written consent of EHedger LLC and this disclaimer is prohibited. If you are not an intended recipient of this message or if this message has been addressed to you in error, immediately alert the sender by reply e-mail and delete this message, its attachments, and any related messages from your computer and destroy any hard copies. If you are not an intended recipient or this message has been addressed to you in error, you are prohibited from delivering, distributing, disclosing, printing, copying, or relying on this message and/or any attachments. Opinions are solely those of the author and subject to change at any time, and are not a solicitation or recommendation to buy or sell commodity futures or commodity options. Past performance is not indicative of future results.