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Corn planting is winding down and is 86 percent done. However, excessive rainfall over the Memorial Day weekend in the upper Midwest. is causing problems. Iowa and Minnesota are struggling to finish planting and running 13 percent behind their average. Some areas are having to contend with flooding which means these acres will probably wind up in preventative planting or soybeans. Meanwhile, exports are the Achilles heel of the corn market. Inspections last week were 12.4 MB with shipments on track for 700 MB compared to USDA’s projection of 750 MB. In other developments, the trend following funds sold 95 MB of corn and are currently short 25 MB. Since April, they have flip flopped twice from a long to a short position.
Since April, July corn has been confined in a range from 610 to the high set before Memorial Day at 669.75. If you will notice on the chart, the lows have been stair stepping higher, which is positive. A rally past 669.75 projects prices rising to 677 or 684. On Tuesday, the market attempted a break out of its trading range but fell short at 669.5. Support is expected on a pullback to 647-642. Meanwhile, a decline below 632.5 turns the trend down and suggests that the recovery from 610 is over. In June, corn futures are lower 68 percent of the time. Next week, the odds are 60 percent that July corn will be down.
Soybeans are underpinned from a near-term tight supply situation and slow planting progress. As of last week, 44 percent of the crop was planted compared to 87 percent a year ago and 61 percent for the average. Minnesota and Iowa are behind the most at 34 percent and 23 percent below their average. Although users are having to scramble to secure supplies, exports have plummeted the past few weeks. Last week, inspections were 3.3 MB with China being a no show. Earlier this week, they canceled a purchase of 147,000 tons. The previous two weeks, inspections were a marketing year low. While weekly sales show that we are on track to achieve USDA’s projection of 1.350 BB, shipments reveal that we may wind up short. In other developments, the trend following funds bought 80 MB last week, increasing their long position to 305 MB. Rather than buying July or August futures, they are going mostly into the November contract.
July soybeans peaked last week at 1546.75 followed by a one-day setback to 1471.25. Since then, the market rose to 1528.5 on Tuesday and backed off. So far, the pullback, from 1546.75 resembles a correction. This suggests that unless there is a decline below 1471.25, we could climb to a new high, possibly near 1575 before the recovery from 1366.25 and 1336.5 is over. Be alert for a top around June 4th-5th if prices are higher. Once the recovery is complete, a swift sell-off may be in the cards. During June, soybean futures are down 63 percent of the time. Next week, the odds are 60 percent that July soybean will be lower.
Wheat is primarily a spectator following corn as there is not a lot of fresh news. The crop ratings were unchanged at 31 percent in good-to-excellent condition. This compares to 54 percent a year ago. Spring wheat planting is creeping along and 79 percent done compared to the average of 86 percent. There has been little fanfare in exports the past few weeks with inspections last week at 21.2 MB. World stocks are expected to increase when harvest in the U.S. commences. Last week, the trend following funds tacked on 95 MB to their short futures position, increasing it to 345 MB. The last time their position was this large was in March.
July wheat peaked last week at 709 followed by a setback to 687.5 on Thursday. So far, the pullback resembles a correction suggesting that once it is done, we could rise to 713 or 723 before the recovery from 674 is over. Longer-term, unless there is a close beyond 736.75, the trend is down with the potential for a sell-off to 630-620. This could occur around June 17th although it may be during the first week of July. During June, wheat futures are down 73 percent of the time. Next week, the odds are 80 percent that July wheat will be lower.
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Comments and suggestions are provided for information purposes only. Information contained herein is obtained from sources believed to be reliable but not guaranteed to its accuracy or completeness. Readers using the information contained herein are responsible for their own actions. No presentations can be made that recommendations will be profitable or that they will not result in losses. This information is neither an offer to sell nor solicitation to buy of the commodity futures mentioned herein. The writer may be trading in the commodities mentioned.