• jcrist18

Market Thoughts 08.07.22

September corn lost 6’0 cents last week to close at 610’2. Obligatory extreme volatility continued this week with corn falling all the way to 583 on Wednesday morning – 50 cents lower than the previous Friday’s high – before rallying nearly 30 cents to close out the week. It was an inside week for corn – the high was lower than the previous week’s high and the low was higher than the previous week’s low. This was the first such week since March 7th, which was then followed by four weeks of consolidation/sideways trade. August soybeans lost 22’2 to finish at 1614’6 while also posting an inside week. Fairly impressive as far as losses go given the massive gains the week prior. September spring wheat lost 19’4 to close at 886’4. Wheat also managed a sizable late-week rally, but somewhat ominously, did not have an inside week and instead traded down to new lows at 864 before recovering.

Forecast models shifted early week, removing extreme heat for most of the Corn Belt, calling for widespread eastern Corn Belt precipitation and weekend rains for the extremely dry eastern NE/northwest Iowa/southern SD region. That’s certainly enough of a forecast change to swing momentum negative following the prior week’s massive gains. Also not helping was Speaker Pelosi’s trip to Taiwan and the Chinese response to it. While presumably it will all blow over without China banning U.S. ag imports, that country does have a lengthy track record of doing such in response to geopolitical issues. And there have now been several cargos of Ukrainian wheat shipped out of the Black Sea with the deal seeming to be holding together. It actually then was quite impressive to see grains rally late week on rising open interest despite all this negative news and without an obvious bullish catalyst. A decent chunk of Iowa/SD did receive forecast weekend rains and coupled with drastically improved eastern Corn Belt conditions, this should all but do away with any potential for a major weather rally. A Reuters story this week noted global wheat consumption will be down 6% this crop year – a staggering decline that easily outpaces production losses and is attributable to corn replacing feed wheat and rice replacing milling wheat around the globe. That story really drives home the demand response to high prices over the past year and coupled with increasing probability of at least average U.S. crops, U.S./Chinese relations strained and Ukrainian grain shipments hitting the market, it has us not nearly as optimistic as we were even a week ago. That said, most commodities are now below pre-Ukraine war levels and the ‘inside weeks’ noted above for corn and soybeans along with rising open interest and an impressive late week rally has us expecting sideways/consolidation trade ahead versus another major move lower.

CRUDE OIL down to its lowest levels since February 2nd/pre-Ukraine war after last week’s losses

DEC CORN Seasonal that we’ve been following closely for months – Dec 2022 has separated somewhat from either 2011 or 2008, trading in a wide sideways range around 600 for the past five weeks.

72 hr Precip Totals

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