The grain markets have seen a nice rally since they put in lows around the end of February pushed by fund short covering with weather as a catalyst according to Garrett Toay, AgTraderTalk.
There are also seasonal tendencies for the grain markets to rally, but how long do those typically last?
Toay says the corn market typically puts in its seasonal high in around the third week of June.
“And coming out of Memorial Day it’s the start of the summer season and so we will be looking for our highs here. Obviously, this spring has been a little different between the planting delays, we have not caught up and now it’s turning back wet again. With the final plant dates for crop insurance coming up that could make things a bit interesting,” he says.
With the funds covering their short positions in corn, soybeans and wheat Toay says they’re essentially neutral, so which they decide to go will determine the market direction.
“When you look at the supply and demand tables it seems unlikely, they want to get long here. Whether they want to reestablish those shorts here if they have more information on how this growing season progresses will be the key attributing feature.”
Some of that direction will also be determined by the results of the USDA June Acreage Report.
“Surveys will be taken in the next two weeks and Iowa has had a lot of rain with about 30% of the corn crop to be planted yet nationally. A million acres here and there could make a big difference on the S and Ds.” he says.
Toay says for soybeans, coming out of the May WASDE USDA’s view of on-farm prices was lower. “So, there seems to be a lot more downside risk in soybeans than in corn,” he says.
Yet, he says the soybean market is trying to digest China’s purchases of old crop soybeans from the U.S. and the firming South American prices.
“Whether this is a realization that the crop size is just not as big as we thought it was and have been talking about the last two or three months,” he adds.
