Grains are back higher after correcting the last three days and removing some weather premium.
Is this recovery all technical and will it last?
Darin Newsom, Sr. Market Analyst for Barchart, says he thinks much of this is technical with grains positioning ahead of the weekend and end of month, plus for wheat it’s the end of the marketing year.
However, of the grains he thinks wheat has the best chance of holding gains with concerns about drought still in 25% of HRW areas.
Other than that, he says there isn’t much bullish about Chicago wheat including an increasing Variable Rate Storage cost and the spreads showing commercial buyers aren’t worried about supplies.
He says, “The Variable Storage Rate pricing period with the daily average of the July-September futures spread through Thursday’s close covered 77.5% cfcc (according to CME calculations). If this daily average is 80% or greater on June 21, then the official storage rate will increase again.”
The forecast does look hot and dry for Russian wheat areas, but Newsom says the crop concerns in Russia only mean something if the U.S. gets additional export business. Weekly wheat exports showed net cancellations on old crop with only 14 million bushels of new crop business.
Markets are also keeping an eye on geopolitical events or at least Newsom thinks the markets should be concerned especially this weekend. He says former President Trump’s conviction may throw cold water on China and Russian leader’s plans to upset the world apple cart.
Corn and soybeans are following wheat despite only 2.6 million bushels of soybean export business confirmed to China, not the two to eight cargoes rumored. So far China has not bought any new crop soybeans from the U.S. and corn sales have been fairly quiet as well.
Cattle continue their slide for a third day and Newsom says it might be due to ideas the cash market has topped seasonally.
