Grain markets were sharply lower on Monday on fund selling and improved weather in the extended forecasts for the Eastern Corn Belt.
Kent Beadle, Paradigm Futures, says, “About next Sunday the forecasts finally show highs below 90 degrees and with the milder temperatures they are looking at some chances of rainfall in places like Illinois and Indiana where things have really started to get dry. And so, traders are looking ahead they’re not necessarily feeling the heat we’re going to get this week is necessarily detrimental to the long-term yields. I am hearing from farmers in that area that plants are curling up,” he says.
Beadle is also getting some bad reports in the Western Corn Belt due to excess rainfall. Southern Minnesota, Southeast South Dakota, Northeast Nebraska had two to four inches of rain this weekend and there was also three to five inches in a broader area of the region.
Unfortunately, he says the market is not concerned about it.
Funds are re-establishing their short position in corn and soybeans and Monday’s selling was also tied to technical damage, which was done in all the markets according to Beadle. “We are below the major moving average in soybeans and have been for a few weeks. During last week’s rally in corn July closed above the 45, 50 day and 100 day moving averages on Thursday and then closed back below those levels on Friday,” he says.
Soybeans are now closing in on old long-term lows and July corn has good support at $4.36 to $4.38.
This is happening despite good demand signals, with stronger corn and soybean cash basis levels and tightening spreads. Beadle says export inspections were also strong on Monday and the NOPA crush for May was a record.
Wheat futures continue to collapse on better-than-expected yields as the HRW wheat harvest progresses and with speculators liquidating in the European wheat market.
