Corn, soybeans, wheat turn lower on weather, dollar strength

Funds make big shift in wheat

Corn, cornfield, sunset Corn, cornfield, sunset

Corn: Overall, the corn had another slightly lower day with old crop accelerating past all other contracts. We have seen the July/December corn spread narrow violently in the last week, which continued again on Tuesday.

Weather saw good totals for rains over the three-day weekend for areas to the north including North Dakota, South Dakota and Minnesota. Many other areas missed out on the rain but are included on a wider sweeping system though this week. In the five-day forecast there are 0.5-inch to 1.5-inch rains expected across a large coverage area that would best be described as the Midwest. Following that rain, there is another one expected for early next week. While weekend rains might have been considered disappointing, it is the forecast that kept pressure on prices across the board.

Moving back to talking old crop corn, we saw the July/December spread break the last large support level of 46-3/4. For old-crop traders who want to trade weather concerns, they might want to consider looking at new crop instead. Even though July calls are the popular choice for weather trades, it might not be the best course of action this summer. December could be the way to go to trade weather. It is tough enough to trade weather and will be only tougher to trade weather and spreads as the July contract is doing right now.

Both the dollar and wheat were outside influences that also affected corn on Tuesday, and we look for that to continue. Wheat yields will offer corn influence short term, and the dollar will continue to influence corn each day it is higher. Looking forward, each dollar move higher, even if it is small, will be significant as it means breaking over 20-month highs…Ryan Ettner
Soybeans: Beans finished the day higher on Tuesday after failing to hold above $14 for the July contract and failing to hold above $13 for the November contract. We failed to see any additional sales announcements Tuesday morning, but this is not surprising as the Chinese have booked a little over 17 million tonnes of U.S. beans over the past four months, with some stipulating they may have an additional 5-7 million tonnes for May. This could take some of the wind out of the bull’s sails short term, as we may not see the export business we have been seeing in recent months.

What we can see as a bullish story is two separate firms have put out estimates for Argentina’s bean crop below the 40 million tonnes number. The USDA should revise Argentine production lower at least one more time this year. Oilseed crushers in Argentina will be striking over wages on Wednesday. We are not anticipating any major disruptions from this activity, or a large price reaction, but these are the events we see moving into summer.

The dollar kept pressure on commodities Tuesday after moving off its early morning lows, taking out Friday’s highs. The Reuters CRB index has also been in a downtrend since the second quarter of 2011. If we continue to see the general commodity liquidation the beans would not be immune to the general commodity sell off…Cordon Sroka

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