Sea legs
If you have even been on a boat in choppy water for any length of time, you know the unstable feeling one can have once you have returned to shore. Well, that would seem to describe corn and bean bulls when they stepped back onto the terra firma of the markets last night, after being tossed about the ship last week. Without question, bull spreading appears to be the position du jour, as not only would that appear to be a less volatile way to participate for now, but with moisture in the forecast for much of the next week, it may be challenging to attract a lot of new buying interest in the new crop months.
We have been greeted this morning with additional corn sales, which should help that cause. China was back in for another 1.7 MMT of corn, and Mexico picked up 128,000 MT, all for the 2021/22 crop year.
Looking over at beans, though, the positive news is not coming via the export scene, and in fact, just the opposite as Brazilian beans are headed this way. Currently, there are around 208,000 MT (7.6 million bushels) either about to arrive or recently loaded to head this way, which is the most significant quantity shipped from Brazil since 2014. Thus far, the USDA has stuck with an estimated 35 million bushels of imports into the U.S. this year, which seems to a rather conservative estimate.
While the final acreage number for this year is still more than six weeks away, and planting is ongoing, that has not stopped some from issuing guesstimates for where those numbers could ultimately be. Last Friday, Informa published their latest with corn projected to come in at 96.8 million acres and beans at 88.4 million. This compares with the current USDA number of 91.1 and 87.6, respectively. If these numbers were correct, the national corn yield could slip to 169 and beans to 50.4 and still maintain the production estimates that were released by the USDA last week.
For the third week in a row, large speculators have reduced their long positions in the corn market, this time liquidating nearly 52,000 contracts. There is kind of a two-edged sword about this. One is that they appear to be backing away from corn, which could suggest they believe we already have highs in place, but on the side if a weather problem does develop when we move into the summer months, they will have some firepower to come back with. There were sellers last week in every market sans meal where they added 17,000 contracts to their positions.
Looking at the Marcos as we kick off the week, we have equities and the dollar lower, financial instruments are flat, and energies and metals are higher. The only move of real consequence though is gold, which has extended into higher highs for the current rebound, nearly recovering 50% of the breakdown from last August record high at 2063.
