The grain markets had a long weekend with the markets closed Monday in observance of Juneteenth. Mark Gold of StoneX Group says a three-day weekend has never happened for the markets in June, which means Monday night’s trade could set the tone.
“It’s kind of like a fourth of July holiday here,” says Gold. “And that’s going to be watched very carefully. If we come in Monday night, it’s still hot and dry, we’ll take a big jump and get open higher, would be my guess, on Monday night,” says Gold.
Gold thinks there is upside potential if the funds want to get engaged in the markets. He says if the hot and dry forecasts continue through the Fourth of July weekend, he says all bets are off in regards to what price grains and oilseeds could hit in the next six to eight weeks.
“Will we get to a price where we’re going to ration the available supply?” Gold asks. “The weather is going to get people all crazy. And all I can say is by yourself a put, and if you rally corn a $1, roll the put up, spend 20 cents and roll up another $1. Spend 50 cents on a bean put, if we rally $3, roll that up for another 50 cents or 80 cents to lock in that $3. What else can you do out here? You don’t want to sell grain that might not be there particularly with these kind of a drought potential out here. I think the only way to really manage it is with these puts,” says Gold while also acknowledging puts aren’t cheap, but at the same time, current commodity prices are at a level that can’t be ignored.”
If grain prices continue to climb, what commodity could lead the way? Bob Utterback of Utterback Marketing thinks it will be corn and wheat this year.
“But next year, I think bean acres are going to go up. And that’s going to keep corn even stronger to 2023,” says Utterback. “We really have to be in a put philosophy here, I completely agree with Mark. This is not a market where you want to wait. Cash is going to be king until we build the supply. And this thing could take clear into next season before we really have the bear in control. So the bear has to really manage his risk right now.”
Utterback prides himself in being a bear, but with the heat and tight stocks scenario, he also thinks corn, soybeans and wheat could see higher highs, even from the price levels farmers see today.
“At the end of the month, if you have a report that reflects some deterioration of acres, and now this heat is going to lower the yield down to 177 [bu. per acre] and you could even go down a little lower. In the next two to three weeks we could see a quite a violent upswing like you saw on 1988 and 2012. I think we’re going to the moon, and that’s the opportunity as a seller when you want to start really thinking about how are you going to start providing some protection for the long-term.”
Read More: Could the High Heat Cause Corn Prices to Repeat 1988 and 2012 Levels?
