Market Thoughts 07.31.22
September corn gained 52’0 cents last week, closing at 616’2. Futures reached as high as 632’0 early Friday morning before fading sharply by day’s end. August soybeans gained a staggering 202’4 to close at 1637’0. Our quick research suggests that is the largest weekly rally ever for soybeans by more than 80 cents. September spring wheat gained 35 cents to finish at 906, but that was off 41 cents from a 947 high earlier in the week.
Soybeans led the charge higher, posting as noted, their largest weekly gains ever by a wide margin. Monday’s crop progress report was surprising/supportive with more severe ratings drops than expected for corn/beans. From there forecast models shifted to an extremely hot/dry outlook the next two weeks for most of the Corn Belt. Also supportive was language in the recently announced Inflation Reduction Act that would include tax credits for biofuels. This caused soybean oil to surge, rallying more than 17% on the week. Wheat news nearly as friendly with the North Dakota wheat tour confirming record yields and reports on Friday that the first Ukrainian ships were being loaded. Ridiculously tight soybean carryout, confusing trade recently (steep losses following objectively bullish June 30th acres report), an extremely bullish weather pattern shift and a fresh demand story – this should be plenty to hold managed money’s focus and would guess beans test their early June highs soon. Corn’s fundamentals aren’t nearly as bullish but will certainly be supported by strength from beans. Wheat looks like it will struggle even with support from row crops.
Not just a weather story for soybeans – bean oil up 17% last week following the Inflation Reduction Act chatter.
Stocks rally last week following the Fed meeting. The S&P 500 has rallied 9% in the six weeks since making a low on June 17th.