July soybeans and soybean meal explode; drag corn and new crop soybeans along 6/11/09

Published on: 18:24PM Jun 11, 2009
July 09 Corn
+ 4 ¼
Dec 09 Corn
462 ¼
+ 4 ¼
July 09 Beans
1268 ¾
+ 22 ¾
Nov 09 Beans
1089 ¼
+ 10
July 09 Wheat
593 ¼
- 2 ¾
July 09 KC Wheat
644 ½
- 3 ½
July 09 Min Wheat
730 ½
+ 4
July 09 Meal
+ 13.8
July 09 Oil
- 0.47

Corn and soybeans closed higher; wheat closed lower. Old crop soybeans and soybean meal led the rally once again. July meal has been on fire and traded only $2/ton off of the contract high set back last July. Tight old crop soybean stocks and a shortage of “high protein meal” are fueling the rally. Old crop/ New crop spreads made new highs in both soybeans and soybean meal today. The dollar was also sharply lower today and this added new buying to all of the commodities. Corn, wheat and new crop soybeans were also sharply higher until a sell-off late in the day. Demand outlooks continue to worsen as margins dive deeper into the red with every passing day. More and more stories of hog producers shutting down continue to enter the news wires. Eventually, this will matter but for now the market is more focused with the stock market and weak U.S. dollar. Old crop soybeans and soybean meal are their own animals. The market is trying to make sure that enough demand is rationed in the old crop. The problem is that new crop prices are trying to keep up. This is rationing demand across the board. With record demand written down in almost every S&D that I see published, I think we might be getting way ahead of ourselves. I still think you want to be heavily protected in corn, soybeans and wheat before the end of the month.
 As long as money continues to enter our markets, the grains can continue to rally despite any underlying fundamentals. However, this is very hard to forecast. Even if futures continue to rally, demand will eventually matter for the cash markets. If demand gets bad enough, the cash markets will stop following the futures markets. Although we are not at this point, it is something to keep in mind. Basis levels are still strong in most areas of the belt. As you make cash sales, make sure to lock in your basis if it is at a good level.
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