Morning Commentary

July corn down 2 ¼ at $4.1825

July beans down 4 ¼ at $8.645

The DOW is up

USD is stronger

Crude oil up $.57 at $53.16

Good morning,

Corn  bears are pointing to increased demand destruction as exports continue to fall behind the pace needed to reach the USDA’s current forecast. Bears are also pointing to some upcoming windows of opportunity for producers in certain areas to get more corn planted. The other big question will obviously be yield? From what I’m hearing, it seems like the current yield debate for the bulls is falling somewhere between 160 and 170 bushels per acre. I doubt the USDA comes anywhere close to this type of early reduction in next weeks report. In fact, most are looking for the USDA to cut their current 176 yield estimate down to around 172 or 173, then perhaps make another more sizable reduction in the July report? It’s hard to imagine we are seeing this much discrepancy and variance in total production estimates. The USDA was thinking +15 billion bushels would be produced here in the U.S., now the battle ground is somewhere between 11.5 billion bushels and 14.0 billion bushels. Since late May, July traded 31 cents off the high and open interest declined 33,000 lots.  The trade count had the fund buying 23,500 corn.  Funds are now thought to be long 9,500 lots.  The short term trend for July corn is neutral-positive.  Stable trade over 426 alerts for a return to trending advances.  Closing below 406 signals a deeper correction. 

Soybean  bears are thinking the delays and complications in corn panting will equate to a greater number of soybean acres. Bears are also pointing to perhaps larger than anticipated demand destruction. The combination of more planted soybean acres and less demand is keeping a lid on higher prices. Bulls argue that ultimately there will be fewer soybean acres than originally forecast by the USDA, especially if the weather continues to complicate. Since late May, July traded 35 cents off the high and open interest declined 33,000 lots.  The trade count had the fund selling 2,500 beans.  Funds are now thought to be short 108,000 lots.  The short term trend for July beans is neutral-positive.  Stable trade above 880.25 alerts for a return to trending advances   Closing under 863.75 alerts for deeper corrective action and a test of 845.75. 

Unrelenting rains catapulted May to the second-wettest month on record in U.S. history, leaving vast tracts of farmlands flooded across the nation’s midsection and jeopardizing this year’s corn crop. May’s precipitation total for the Lower 48 states was 4.41 inches, which was 1.5 inches above average, according to the National Oceanic and Atmospheric Administration (NOAA). I’m told the past 12 months have been the wettest such period on record for the lower 48 since records began in 1895, with rains especially concentrated in the Midwest, Plains, and Northeast. It’s worth mentioning that rainfall during this period was 37.68 inches, which was 7.73 inches above average for the period and the previous all-time 12-month record set this April was 36.2 inches.

Hong Kong Pork Prices Explode As Slaughterhouse Reopens:  Reopening after a four-day closure, thousands of pigs are being culled and the facility is being cleaned after the detection of another case of ASF last week. Keep in mind, the Sheung Shui slaughterhouses are expecting the price of pork to double. Not only is the Dragon Boat Festival creating high demand, but I’m told traders say that fewer pigs are being imported to Hong Kong than usual as 2,200 pigs passed through the abattoirs on Thursday – 1,200 from the mainland and 1,000 hogs from local farms. Remember, there would be around 4,000 to 5,000 animals regularly available in Hong Kong each day.


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