Headlines:
– USDA ACREAGE REPORT IS SCHEDULED FOR JUNE 30TH
– HEDGE FUNDS HIKE BULLISH AG BETS TO 2-YEAR HIGH, AMID ‘INFLOW OF MONEY‘
– CORN FUTURES RALLY, SOYBEANS FALLS BACK
CORN FUTURES ROSE, FUELED BY A WORSENING WEATHER OUTLOOK IN THE US MIDWEST, WHILE SOYBEAN FUTURES FELL, AS MARKETS FACE THE PROSPECT OF A RISING ACREAGE ESTIMATE, AND TRADERS TOOK PROFITS FROM THE PREVIOUS SESSION‘S NEAR TWO–YEAR HIGHS. MARKETS HAVE FOR MONTHS NOW BEEN EYEING THE WIDE PREMIUM OF SOYBEAN TO CORN PRICES. WITH ROW CROP PLANTINGS NOW LARGELY COMPLETE, THE QUESTION IS JUST HOW MUCH GROUND FARMERS HAVE SWITCHED OVER TO SOYBEANS FROM CORN, IN ORDER TO CAPITALIZE ON THE SOARING OILSEED PRICE. AS OF FRIDAY, THE RATIO OF NOVEMBER CORN FUTURES IN CHICAGO TO DECEMBER SOYBEAN FUTURES, THE KEY NUMBER THAT FARMERS KEEP THEIR EYE ON WHEN MAKING THEIR PLANTING DECISION, STOOD AT A WHOPPING 2.7, WHERE ANYTHING OVER 2.5 IS CONSIDERED A STRONG SIGNAL TO PLANT SOYBEANS. SO MARKETS AREN‘T ASKING WHETHER THE USDA WILL ADJUST THEIR ESTIMATE OF US ROW CROP ACRES IN THE NEXT REPORT, OUT ON JUNE 30, BUT BY HOW MUCH.
Summary:
In the overnight and pre-market session Soybean came out of the gate with the appearance of souring to higher levels. The July contract was up as much as 20.50 cents in intraday action and the November contract saw a watermark high of 20.50 cents. Last week we projected that Beans was potentially at the precipice of a high either on Friday or early this week. Confirmation remains to be seen but today was a good start. July beans finished the day in negative territory down 6.50 and November Beans lost 0.50 cents. Soybean export expectations were not strong coming in at the low end of expectations.
On the flip side it was our position that Corn stood to continue moving up to sideways through the end of the month. Today, Corn found strength from forecasted weather events suggesting excessive warming in the Corn belt regions. This is potentially consistent with effects as we transition from El Nino to La Nina. July Corn was up 7.25 cents and December Corn gained 9.50 cents on the day. Export inspections were strong for Corn.
July Wheat was down for its 3rd consecutive day dropping 3 cents into the close. Weather forecasts for Wheat were beneficial warmth to its crops as rain moves across the Kansas and Nebraska this week. Additionally the nearby contract was under pressure with traders rolling from the nearby contract to the deferred contract.
