Excessive rains with more to come and the slowest-ever planting pace in mid-May on corn (49%) sent heavily short commodity funds running for the exit door early Tuesday. Managed funds, who just last week had been short a record 344,000 contracts of corn, may have entered Monday night trade still short 200,000 contracts. July corn has rallied 56 cents per bushel with funds buying in just 42% of their net short. The forecast remains troublesome.
Midday: Corn trade again leads broadly firmer action.
Corn trade is 5 to 7 cents higher at midday with trade leaving another gap higher on the weekly crop progress report with July stopping short of $4.00 before fading a little. Wet weather is expected to remain in place for much of the western and central Corn Belt keeping the slow pace slow.
Ethanol margins are narrowing fast with ethanol futures unable to keep pace with the corn rally even as it moves to $1.40 a gallon, and better summer usage. Basis has seen selling pressure from farmer movement.
On the weekly crop progress report, we are 49% planted vs. 80% on average, and at the low end of expectations and historically with 19% emerged vs. 49% on average.
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 $3.99, then $4.00.
Soybean trade is 4 to 7 cents higher with trade following corn higher with the weather concerns starting to build with the planting pace and acre switching for soybeans but selling sticking around on strength. Meal is flat to 1.00 higher and oil is flat to 10 points higher.
Crush margins remain solidly positive overall with meal still looking to reconsolidate above $300, which we are just below. South American currencies remain cheap at the end of harvest, with the export wire quiet this week.
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 with the corn soybeans ratio the narrowest in 8 years.
Trade talks are expected to continue, but little progress is expected in the near term along with further talk about trade aid with aid of $2.00 a bushel rumored. Weekly crop progress remains well behind normal at 19% vs. 47% on average, and 5% emerged vs. 17% on average.
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 closed above, with the next round the 20-day at $8.38, which we are tested but failed to hold.
Wheat trade is 3 to 8 cents higher with Kansas City trade leading with wet weather raising more quality concerns with spread action remaining stable. 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 crop progress report showed winter wheat at 66% good to excellent, and 8% poor to very poor, up 2 percentage points, with 54% headed vs. 66% on average. Spring wheat was 70% planted vs. 80% on average, with emergence at 26% vs. 51% on average.
On the July Kansas City chart, support is the 50-day we moved through overnight at $4.27 with the 100-day at $4.64 the next round up.