After Monday’s blistering bull run, the market is lacking follow-though. Monday saw a huge snap-up with July up nearly 200 points, and new crop December up some 125 points. Of course, the market spent the first fifteen days of calendar May losing some 1,200 points, so a bullish knee-jerk at some point was to be expected.
Yet, the market lacks any new friendly fundamental for sustainability. For starters, the U.S.-China trade talks no longer dominate the daily headlines. In fact, the next opportunity for the U.S. and China to gather will be at next month’s G-20 Summit in Japan. There President Trump and President Xi may rekindle the stalled negotiations.
In other news, USDA reported the 2019 crop as being planted pretty much on schedule. The only misfire lies in the U.S. Delta, where Mother Nature is hampering planting efforts there. Numerically, the 2019 crop stands at 44% planted, versus last year’s 50% and its 5-year average of 45%.
Delving in, Texas is 39% seeded versus last year’s 41%, and the 5-year pace of 34% complete. Georgia is 61% compared to 2018’s 54% and the 5-year average of 51%. As we previously mentioned, both Mississippi and Louisiana are 34% complete, but their 5-year history is 69% and 83% respectively. So there is a touch of lag in the crop, but it seems not to be widespread.
However, we are thinking the condition of those fields planted may be less than robust. USDA will begin reporting on the condition of the 2019 crop in a couple of weeks. In addition to the overly wet Delta, hail ravaged Texas, the two-week weather outlook calls for superior hot and dry conditions across the Southeast.
So, even as the crop is being planted on pace, the weather forecasts suggest trouble lies ahead towards its overall health.
For today, close-in support for December lies at 67.00 cents and 66.20 cents, with resistance at 68.20 cents and 69.40 cents. Overnight estimates volume is 5,242 contracts.