Market Thoughts 06.13.21
Current Clients we will be sending out a separate email with the weekly Market Algo readings.
Corn Complex- WASDE out this week with confirmation of what the trade has largely been trading with US carryout dropped to 1.1 billion bushels. Although we did see higher prices post report, we did not take out the May 7th high. The market now looks forward to the June 30th stocks and acreage report, with many in the trade expecting higher corn acres to come. Weather continues to swing the market as mid and late week rains in parts of ND, SD, MN, and IA helped relieve those areas with some moisture stress. These same areas will continue to need timely rains to maintain trend yields. Fund longs are well off their overall high but still hold a sizeable position. South American crop volatility is basically finished as second crop corn there moves late into its maturity phases. Estimates still abound with Brazilian overall crop size landing in the 92-95 MMT range. Overall look on things for the next couple weeks is weather maps leading up to the big month end reports.
Soybean/Canola Complex- New crop beans remained relatively range bound for most of the week. WASDE report did indicate a slightly larger carryout for the 2020 crop due to expected decrease in bean crush to end the year. Although a small adjustment higher, the thought we are going to run out of beans here in the US is off the table with this adjustment. To further back the adjustment higher we continue to see solid processor coverage thru the end of the summer across the Midwest. Meal has struggled in value with animal unit demand seeming to have fallen with many feed mills across the Midwest expressing that overall feed demands are down. Internationally we continue see poor crush margins in China even with seasonally cheap soybeans coming out of Brazil. Canola did take out an old high during the week, but the fell after continued projections for timely and extensive rains across the Canadian provinces.
Wheat Complex- Spring wheat had a volatile week with a gap open higher on Sunday night followed by a quick reversal unable to hold the 2017 highs. The market remained focused on rains that then fell mid and late week across the state helping some areas to 2+ inch totals. In addition, most of the central and southern Canadian prairies also managed to catch decent moisture with the system this week. Although rain was too late to remedy some crop, it will still help to temporarily alleviate conditions. Winter wheat harvest has ramped up across the southern plains with yields looking quite good in most areas.
Outside Markets- Equities continue to maintain near all time highs. Consumer inflation readings this week were higher, many economists still view these readings as transitory. Oil did trade over $70/bl this week with continued concerns about supply not getting online quick enough to meet the short-term demand. One other note of interest is lumber futures continued their liquidation as nearby futures nearly broke below $1000/bf well off its high of $1800/bf just over one month ago. Lumber is worth watching as it can serve as a bit of leading indicator for overall economic health and tends to lead equity/economic corrections by 3-6 months.
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.