Grains and oilseeds were lower again following Thursday’s selloff. The market had been rather mixed at the midpoint of the trading session but had an especially poor close. For the week December corn closed up 23 ¼ cents while November soybeans were down 24 ¾ cents! Cattle-on-feed was at 97% and placements at 98%, both a little higher than expected but the beef stocks were well below expectations.
Last week we mentioned how outrageous the corn-soybean ratio was getting after it surpassed 2.45 to 1 especially during a late planting year. The spread has since retraced and is now down to a reasonable 2.29 (see chart). Some may argue this retracement in the spread/support in the corn is due to the warm/dry weather in the forecast. We don’t see that as a threat at this time. The market was just pricing in a premium for overly wet and cold conditions and now the chance for drier and warmer weather is an imminent threat? We still have to get through the month of July without weather issues but we find that a normal weather pattern will be more likely than drought which some are already calling for again. I think the default assumption is that problems will arise since we have had three bad growing years in a row and the memories are fresh.
Next week will be filled with fresh fundamental news for price fluctuation. Monday we have crop ratings for corn and soybeans as well as soybean plantings. Friday we will have the highly anticipated quarterly stocks and acreage report. The average acreage guesses are in from the Reuters poll. They are pegging corn acreage at 95.313, soybeans at 77.933, and all wheat at 55.902. We will notify you when the quarterly stocks estimates come in. Have a great weekend!