Grain markets all ended lower on Monday even wheat after double digit gains overnight and on the open.
Alan Brugler, Brugler Marketing, says it was a risk off day in grain markets which were removing risk premium. The lack of money flow into grains, the stock market and crude oil was also evident to start June.
“The asset allocators were selling last week, Thursday and Friday particularly taking money off the table that they made earlier in the month. You didn’t really see that coming back into the market,” he says.
There was uncertainty about the crop condition ratings on corn and going into the USDA reports on soybean crush and ethanol grind all to be released after the markets closed Monday.
The soybean market was down the hardest with the huge selloff in soybean oil. “This was disappointing considering we got some friendly news out of the March biodiesel and renewable diesel production numbers out late Friday,” he says.
The corn market was removing weather premium with the idea that rain makes grain and with expectations for favorable national crop ratings on Monday afternoon.
However, Brugler thinks there may still be a bullish case with forecasters discussing hot and dry conditions in July and August, but that’s story is down the road.
Both corn and soybeans did technical damage, closing below many key moving averages. “We’ve got a head and shoulders top of some of the corn charts.”
Bigger picture, the monthly corn charts were higher for the third month in a row.
Wheat futures also reversed some early strength drug down by the row crops and seeing some technical selling. Some rain chances in Russia also weighed on futures as Brugler says there is hope some areas hit by frost will be able to replant now.
However, he also says the wheat market looks tired. “Our technical models have reached the mostly likely highs for the period,” he explains.
