Weekend rain and even snow, plus a forecast that promises more rain the next 10 days fueled Monday’s sharp grain and soy complex rally. As planting seriously lags the average pace in corn and soybeans, and severe weather threatens wheat, funds are scrambling to cover part of their large net short, driving prices significantly higher than a week ago in corn and wheat. Soybeans have been a reluctant follower.
Midday: Broadly firmer trade on weather concerns to start the week.
Corn trade is 5 to 7 cents higher at midday with the wetter forecast continuing to add support ahead of the planting progress report this afternoon. Wet weather is expected to remain in place for much of the western and central Corn Belt.
Ethanol margins are narrowing fast with ethanol futures unable to keep pace with the corn rally even as it moves closer to $1.38 a gallon.
Basis has seen selling pressure from farmer movement. The weekly export inspections softened a bit at 820,916 metric tons. On the weekly crop progress report, trade will be watching to see how close we are to 50% complete.
On the July nearby chart support is the 200-day at $3.86 3/4 that we moved through overnight with the next level of resistance the day high at $3.91 1/2, then $4.00.
Soybean trade is 10 to 12 cents higher with trade rebounding from selling on Friday with support from the grains and weather. Meal is $2.50 to $3.50 higher and oil is 25 to 35 points higher. Crush margins remain solidly positive overall with meal still looking to reconsolidate above $300.
South American currencies remain cheap at the end of harvest, but rising basis is helping U.S. offset somewhat. Field work should generally remain slow in the near term but more progress is likely into next week with little incentive for farmers to push right now along with acres possibly shifting to corn or milo.
Trade talks are expected to continue, but little progress is expected in the near term along with further talk about trade aid. Weekly export inspections remain slow at 497,070 metric tons. Weekly crop progress will be expected to show planting well behind normal.
The July chart support is the $7.96 lower Bollinger Band with the $7.91 low below that, and the resistance the 10-day at $8.24, which we are back above at midday, with the next round the 20-day at $8.24.
Wheat trade is 10 to 17 cents higher with Kansas City trade leading as the spread vs. Chicago continues to reverse with trade moving from 51 to 43 cents the last couple of trading sessions. Europe and the Black Sea area will be watched with dryness in the Volga Valley, and wet weather in the U.S. potentially limiting planting and causing disease issues in the winter wheat.
The dollar remains rangebound. Hard red wheat is working into feed rations in some areas with the bounce in corn values with the wheat rally looking to change that. The weekly export inspections were strong again at 757,704 metric tons.
The weekly crop progress report is expected to show steady conditions and lagging maturity with spring wheat progress closer to normal, with challenging near-term conditions.
On the July Kansas City chart, support is the 50-day we moved through overnight with the 100-day at $4.64 the next round up.