New crop corn led the market higher with strong gains in wheat as well. December corn closed 20 cents higher at $5.70 ½, November soybeans 21 cents higher at $13.10 ¾, and July wheat up 19 ½ cents higher at $7.07.
The surge in corn prices is not linked to any specific news story which means it may be more a product of the current positions held than a change in fundamentals. There are not a lot of natural market sellers holding offers above the market which has allowed for this rally to continue. Producers who have sold early over the past couple of years are reluctant to continue pricing corn/beans especially when different sections of the country have had poor weather to start the growing year. Of course we can’t predict the weather in July and August but that will ultimately be the main deciding factor. However… we can agree that A LOT of weather premium is likely worked into the market prices. The assumption that weather problems ARE going to return is also holding back hedgers from making those lofty sales. If we get past the June 28th report without any bullish surprises, and the crop continues to progress (barring any real weather problems) we should see the market start take out premium from heavier producer selling. In the mean time, can we go higher? Sure. But we have to remember the last time funds bought into these levels was right before the March 28th report which resulted in a double lock limit down move after stocks were reported 400 million bushels more than expected. Are the funds ready to buy at new highs into next Friday’s report again? If your crop is looking good and you haven’t sold or protected all of your guaranteed bushels, it may be a good time to look at protecting more of your downside price risk. Please call us to go over your available marketing options.
Informa released their acreage estimates today and have corn pegged at 95.262 million and soybean acres at 77.756 million. These were not significantly high or low in our opinion. The weekly ethanol report showed production down and stocks up – also not a surprise. After the close the FOMC minutes were released which created in a sharp move higher in interest rates and the Dollar Index while the stock indices were sharply lower. This may have a slightly negative impact on commodity prices on the overnight open.
December Corn Futures
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