Missed a recent article by Jon Scheve? Get it sent to you directly every week. Send a request by email: jon@superiorfeed.com
Market Commentary for 6/10/22
For the week:
- July corn finished up 46 cents
- December corn finish up 30 cents
- November soybeans finished up 40 cents
- July wheat finished up 30 cents
Corn
Corn managed to erase most of its losses from the previous week, likely due in part to the cash market’s desire to find corn for immediate use. It seems farmers are uninterested in selling corn with July futures below $8. Also, many farmers think there could be substantial upside potential with any July dry weather and are just not selling anything at these values.
USDA Report
The June USDA report is one of the least important reports of the marketing year, and this year was no different. One of the few notable adjustments was in export demand. Beans had an increase while corn had a slight reduction.
Ukraine
The market continues to be extremely volatile because no one knows how much grain will get exported out of Ukraine. This uncertainty could hang over the market for weeks, if not months.
Corn Basis
Last week I mentioned the basis market was indicating a potential futures rally. This week the July corn board increased, and it rose faster than September futures. This resulted in a spread increase, which when combined with the huge basis rally the previous week, likely indicates old crop corn futures are still undervalued.
Looking Forward
With corn export pace not being as high as originally forecasted, and basis values being extremely high with the spread increasing, it could suggest the 2021 crop size was overstated. Or farmers are just holding on to their last old crop bushels waiting to see what summer weather is like.
Last year most US farmers emptied their bins by harvest, but the Ukraine war had not started yet. Maybe some farmers have plenty of bin space this season because they completely emptied out last year, and they are planting more beans this year which leaves them with more room to hold over grain into next year. From a cash flow perspective many farmers may not be as pressed to move the grain from their bins as quickly as they usually would. This could give them the flexibility to hold out longer for much higher prices if dry weather shows next month or the situation in Ukraine does not get resolved.
Bottomline:
War and weather are unpredictable. We don’t know anything more on those two fronts than we did a month ago. The market is now waiting on the June 30th report to see how many corn and bean acres got planted.
Want to read more by Jon Scheve? Check out recent articles:
Is the Basis Market Indicating A Potential Corn Futures Rally?
Are Corn And Wheat Overvalued?
Are Beans Trying To Buy Acres Away From Corn?
Do Market Conditions Warrant $8 Old Crop Corn And $7.50 New Crop Corn?
Are The Highs In? War And Weather Make Predicting Difficult.
Jon Scheve
Superior Feed Ingredients, LLC
