Closing Markets: Corn: -2.50 old & -1.25 new.
Beans: -4 old & -4.50 new. Wheat: -10.25.
Good evening!
Market Recap-
Ag markets were mostly lower to start the new week and the new month on Monday, with risk-off selling across the metals and energy markets continuing to have an outsized impact on CBOT price action amid an ongoing lack of real new news otherwise. A sharply higher dollar index was also partially to blame, but we would note improving weather in Argentina and, in the case of wheat, negative chart patterns, as also having an impact on trader sentiment throughout the day.
Corn Summary-
The corn market was lower to start the week on Monday, with selling noted pretty much from the word go last night as a $3.50/bbl decline in crude oil futures gave the market negative headwinds that it just couldn't overcome. Pressure was also likely attributed to what most feel is setting up to be a better month of weather across the Argentine ag areas beyond the next few days, which could stabilize production estimates that are still fairly lofty due to plenty of early season moisture. We would also note that contrary to some speculation that thought otherwise, fund traders as of last Tuesday have continued to sit on a modest net-short position, which while on one hand could provide fuel for a short-covering rally, also means they still see the path of least resistance as lower. Like we've talked about repeatedly, the market requires a supply issue in order to get an actual rally.
Soybean Summary-
The bean market closed lower to start the week on Monday but was well off its lows made early in the overnight session as higher trade in meal futures was able to keep the market somewhat close to the surface for the majority of the day session. Like was the case with corn, a lot of the pressure was presumably attributed to the sharply lower trade in the crude oil market, which likely pressured bean oil to a large degree. Otherwise, enlarging private estimates of the Brazilian soybean crop have continued to linger in the background, which on the margin, also pressures prices. The bottom line here still remains that unless the US government mandates a significant jump in soybean oil usage for biofuels, South America will dominate global trade flows into at least the late summer months, with bigger concern being a crop of closer to 190 MMTs, if it happens, cold push this window all the way past the beginning of new crop harvest in the US.
Wheat Summary-
Wheat futures paced the Monday declines at the CBOT today, though it seemed nobody could come up with much of a great reason as to why which led to blame being placed on the usual suspect of chart selling. Aside from falling back below the 100-day moving average, the market also fell back below the long standing downtrend line that began almost tow years ago now, which likely also added to pressure throughout the day. Otherwise, there wasn't a lot new here on the global front today, with Russian export prices quoted just slightly higher from last week and there little new on the export fronts for either Australia or Argentina.
Outside News Headlines-
Crude oil futures down $3.10+/bbl.
Weather Updates-
Both the EU and the GFS models are in good agreement coming out of the weekend on a pair of storm systems being the main weather features for the Midwest this week. The first is expected to work through the southern part of the region and more of the southeast Tuesday/Wednesday and will be more rain than snow, and the second then comes from the northwest and impacts more the Great Lakes area and northeast then Friday/Saturday.
In the week two period this afternoon, models have trended notably wetter through most all of the western 2/3s of the country, though the GFS is slightly wetter than the EU. The two have also trended warmer in the 10-15 day period, as high pressure ridging that has been parked across the western US is finally displaced to the east and allows temps generally east of the Rockies to return to above normal levels.
Following 10-15 days of hot/dry weather across a lot of Argentina's ag belt, forecasts coming out of the weekend are in good agreement on a pattern shift coming around mid-week this week that will likely bring about much improved moisture and a drop in temperatures to more seasonally average levels. Ten-day anomaly maps this afternoon also reflect this wetter shift, which if it verifies, will be positive for crop development.
It looks to be another week with little new from a forecast standpoint for Brazil, as models, like last week, continue to show ongoing monsoonal rains across the central and north-central parts of the region, with drier conditions still then to the far south and the far north. The regular mix of rain and sun keeps temperatures near average for the most part, with the only chances for somewhat concerning heat seen south of the country's main ag areas. Like we've said several times now over the past 4-8 weeks, Brazilian weather has been nearly ideal for crop development, and early yield reports that are up some 10% in places would seemingly reflect this.
Enjoy it!
Bailey Runyen
Grain Originator | Topflight Grain Coop.
101 N. Main St. | Cisco, IL 61830
Phone :: 217-669-2141
Email :: brunyen@tfgrain.com
