Morning Commentary

July corn up 8 ¼ at $4.6125

July beans up 13 ¾ at $9.105

The DOW is up

USD is weaker

Crude oil down $.26 at $52.25

Good morning,

Corn  bulls continue leading the market! New-crop prices closed last week +80 cents higher than compared to last year at this time. On the flip side, bears are poignant to weaker than expected export demand and potential demand destruction in both ethanol and feed if prices continue higher. There’s been a lot fo talk inside the trade about the historical tendency for corn yields on acres planted after May 30th to be down roughly -12% to -15%, and corn planted after June 10th to show a yield drag of roughly -18% to -22%. Obviously, these estimates are big generalities and a shot in the dark, as weather moving forward is still a complete unknown and a huge wild-card. The short term trend for July corn is bullish. The market is poised to trade 465.5 in the near term (the overnight high was 464.25). Closing below 429.25 signals a correction. My (ABN Amro) long term target is 560.5 for spot futures. 5,000 lots less long than indicated by the trade count, the CFTC said the fund was long 67,000 corn as of June 11th. Funds are now thought to be long 163,000 lots. Index funds increased their net long by nearly 20,000 contracts during the last reporting period.

Soybean  bulls remain up to bat as traders keep a close eye on U.S. planting progress. Regardless of what happens moving forward, there was more than 75% of the entire soybean crop “unplanted” as of May 20th. Many states start to see reported yield drag on acres planted after that date. FarmDoc Daily indicated in one of their studies last week, that field trials in Illinois where showing yield losses higher than -10% on acres planted after May 20 with increasing yield losses as planting moved deeper into June. They noted planting after June 10 could led to an almost -20% yield drag. For what it’s worth, the USDA estimated close to 33 million soybean acres were still unplanted as of June 9th. From what I understand, several sources are thinking China has already culled nearly 100 million pigs, which is larger than the entire U.S. hog population. A Rabobank report recently estimated it would take over 5 years for China’s pork production to recover fully from ASF. The short term trend for July beans is bullish. The market achieved our short term target at 910.5 overnight. Stable action above 894.5 implies a run towards 950. Closing under 873.25 signals a correction. 13,000 less short than indicated by the trade count, the CFTC said the fund was short 115,000 beans as of June 11th. Funds are now thought to be short 81,000 lots.


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