Corn: Monday, corn followed wheat higher for most of the day and also was the target of bear spreading. This bear spreading gives the impression that the CME traders were on the selling side through most of the day.
Weather did not offer a direct clear cut direction, as some rain was increased for areas while it was reduced elsewhere. A good summation that we saw ended up concluding that rain is still expected at the end of the month and as long as that appears, conditions should hold well enough. Stress will build in areas, especially to the south, but there are still saving opportunities for rain in the forecast.
With old crop corn finishing just under unchanged and new crop finishing just over unchanged, it appears traders were not looking to make many weather adjustments just yet…Ryan Ettner
Soybeans: Bean spreaders controlled the markets Monday as we saw the new crop/old crop spread tighten in 10 3/4 cents. The focus is shifting from old crop to new crop as dryness and warm temps through most of the belt are causing concerns about yields. With the prospect for a tight crop already providing a bullish undertone, any issues during the growing season could cause the spark needed to ignite a further rally in new crop beans.
We could see old crop test the psychological 14.00 dollar level, but until we see this market take out the 1376 low on the 14th we should look for sideways to higher trade. We need to see a close on the old crop above the 20-day moving average before this market can be bullish again.
Planting pace came in Monday at 76% complete compared with the trade expecting a number close to 68%. What we need to keep in mind with this hot and dry weather is a bean crop can be made or lost with rains in August during the key pod fill stage of growth. The warm temps and lack of moisture to get started will stress the crop but if the weather pattern is consistent with NOAA’s forecast we should see normal to slightly above normal temps and normal precipitation for the summer months.
Look for the 14.00 area to be supportive for old crop and the $13 area to be support for new crop. Spreaders are running this market right now, so look for the spread between the old crop and new crop to continue to tighten…Cordon Sroka
Wheat: The wheat market took full advantage of the CBOT’s new trading hours, trading a 39 1/2 cent range Monday. The overnight session volume was higher than most day session's volume. When the market finally settled out, the July Chicago contract settled 8 3/4 higher at an eight-month high.
The fuel for the rally continues to be weather concerns. The trade is worried that the combination of heat and lack of rain in the southern plains is limiting yield prospects. Most of the crop has matured enough that crop damage potential should be limited but the trade is continuing to add risk premium into the market until it get a better handle of actual damage done.
The United States is not the only area of the world that is experiencing production cuts due to dryness. The Ukraine, Kazakhstan and Russia are also dealing with yield robbing dryness…Jim McCormick