Corn continued its rally this time closing 15 cents higher in July and 30 cents higher in December. Soybeans did not hold the same strength and closed the day down 12 ¼ cents in the November contract. Wheat closed 4 ¾ higher.
Weather and declining crop conditions are still the major driving factors for today’s market action. After the close yesterday corn’s good-excellent rating fell by 7 percent! We are obviously seeing declining conditions from the dry weather but the midday forecast did offer some additional rains in the forecast for Sunday into Tuesday. The lower Midwest is also expected to see slight increases to the rain event expected July 3rd – 5th. No major updates or changes were expected for tropical storm Debbie on the Midday.
So why was corn up 30 while beans had double digit losses? Many traders are concerned with the difference in crop stages for these weather risks, but a lot of it could be repositioning ahead of the reports on Friday. We know that the "managed money" is massively long soybeans. While their position shows them net long corn, it is a significantly smaller position when compared to the beans. This massive move in the corn/bean ratio over the last couple of days could be as simple as the funds repositioning by purchasing corn and selling beans. I have indicated this move in the ratio in the chart below. We are now back to a ratio of 2.26 to 1 which is almost to the 200 day moving average. We won’t know exactly what the funds have done until we get the next Commitment of Traders report on Friday afternoon.
Chart: November Soybeans – December Corn Ratio
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