Market Thoughts 06.01.21
Weekly Market Recap
Current Clients we will be sending out a separate email with the weekly Market Algo readings.
Corn Complex- Quite the wide range of trade during the week with rumors of Chinese cancellations followed up by Chinese purchases had the market chasing its tail. Corn retested the 62% retracement levels from recent highs at mid-week and rallied into weeks end. With a strong technical move this last week, would likely believe we will continue to carve out a range in trade while awaiting what if any potential weather issues may appear for later this growing season. Funds have continued to hold onto their long’s vs market expectations of big liquidations in the last few weeks. Export sales have continued decently for corn but have not exceeded the 10-week average since early March. Brazilian safrinha crop size has been knocked down to the low 90MMT total crop size with exports estimated around 25-27 MMT. We will see this Brazilian crop continue to compete vs the US in the late summer market even with their smaller crop size. Current South American corn for that slot is $.50/bu cheaper than US corn, so even with tight US balance sheets, there will be other competition.
Soybean/Canola Complex- Beans and canola both ended the week on a slightly higher note as a nod to their tight balance sheets, continued to give new crop months resilience until more is known about new crop size. Soybean crush continues to be led by the need for soy oil as renewable diesel mandates make for almost unlimited demand for veg oils. This has led the world veg oil market higher worldwide making another food vs fuel debate coming to center stage. World oilseed balance sheets remain snug, but additional acreage coming online in South America this next year start to improve the balance sheet. Canola has taken a bit of a breather waiting for later season weather issues as well. Although ND canola acres have struggled, Canadian acres are in better shape to this point, especially with the higher expected acres. Funds have continued to decrease their fund length in soybeans, but still maintain a long around 140k contracts.
Wheat Complex- Spring wheat market finally took notice to poor conditions as the first week of crop progress conditions came in below market expectations. As many of you are currently experiencing limited moisture with upcoming seasonally warmer weather many areas in North Dakota are likely to experience a further decline in crop conditions. Another note of demand for spring wheat is the continued rains across KS/OK winter wheat country. Likely that crop will be low protein with relatively large bushels. Combine that with a poorer spring wheat crop and we will see more positive protein scales for spring wheat and likely overall better basis.
Outside Markets- Outside equity markets have seen more volatility in recent weeks but continue to run near record highs. Core inflation measures continue to surprise to the upside, making many question if the Fed will be forced to raise rates sooner than expected. Dollar index has retreated to around the 90-point level.
Seasonal Charts- Below are 15-year seasonal charts for Corn, Beans and HRS
This material should be construed as market commentary, observing economic, political and/or market conditions, and not intended to refer to any trading strategy, promotional element, or quality of service.Information contained herein was obtained from sources believed to be reliable but is not guaranteed as to its accuracy.These materials represent the opinions and viewpoints of the author