Grain markets see overnight and early pressure with planting still ahead of average and crop ratings for corn and wheat better than expected. Plus, outside markets were bearish.
However, corn and soybeans are trying to come off lows on a Turnaround Tuesday bounce.
Grains are over sold as they have seen a quick correction from recent highs.
Jon Scheve with Superior Feed Ingredients says the markets are looking for direction from weather, the June WASDE and Acreage Reports to determine the next move.
“We did get the crop for the most part planted on time, there’s still a few pockets that aren’t, and this is matching a lot of what 2022 looked like. In general, the planting pace is adequate. The Northern states are way, way ahead of normal and I think you’re going to see less prevent plant up there, conditions are good. We just have to wait to see what the weather is like,” he says.
Seasonally the grain markets are in a transition and waiting period and so they tend to drift without bullish news.
“So, I think right now you’re looking at a seasonal that if we follow history pretty much you hit the middle of June you can certainly top on out and then you start to head South and you may not recover until next summer,” he says.
The funds have covered a big chunk of the short position they held all winter and are also watching the weather according to Scheve.
“I think they have to be. They look at the market in a carry and they say there’s no reason to be buying this. We did see what they did when there was a concern. They bought and sent wheat up $2 a bushel very quickly and could the same thing happen to corn if some dryness comes in? Could we rally a $1 very quickly? I think that is possible the question is are the conditions going to be right for such a scenario?” he adds.
He says corn will have a tough time going higher without a continued rally in wheat but the market is at a point it needs a bigger weather scare later this season or some news out of the June WASDE or Acreage Reports.
He doesn’t think USDA will adjust corn yield in the June report, so the bigger question will acreage. “That’s the billion-dollar question right there. We were at 90 million acres in the March report but there’s been big debate that corn acreage was too low with principal acres down.”
Scheve has seen estimates from 87 million to 93 million on corn but says it’s not likely either of those two extremes.
He says end users are also buying hand to mouth with the knowledge that farmers still have a lot of grain in storage, especially corn.
Historically the lows occur between July 4 and Thanksgiving and so they are waiting with a 75% likelihood prices will go down after July 4.
