July corn +18 ¼ at 7.01
Aug Beans 30 ¼ at 15.6775
The DOW is UP
USD is Down
Crude oil -.22 at 69.40
Overnight grain markets gapped higher on hot and dry weather over the northwestern US growing region. The market remains concerned over the dry soil moisture profile early in the growing season across the N Plains and western to upper Midwest that will be exasperated over the next couple of weeks. Limited rains are seen this week for parts of ND but this event will offer only a temporary reprieve to stressful conditions with more hot and dry in the forecasts. Meanwhile the outlook remains favorable for crops to the south and central to eastern corn belt. The crop conditions report this afternoon should start to reflect this west vs. east disparity. With a pipeline carryout that is projected to last through the next marketing year even with a good growing season, the soybean market has zero tolerance for a production threat and is quick to add risk premium.
The rally in beans is led by the new crop with November futures gapping into a new contract high. Weather and weak spot basis is weighing on the bull spreads, in addition to the index fund roll that begins today.
In the product trade, both meal and oil gapped higher with oil trading into a new all-time high. Rapeseed is trading $19 higher and into a new contract high although the weather forecast shows good rain coverage on the way to provide relief to the drought areas in the Canadian Prairies. Malaysian palm oil was closed today.
The COT report showed managed fund money through the week ending 6/1 +21.8k corn (net long 289.9k), -1.3k srw (net long 3.2k), -4.4k (net long 19.0k), -602 beans (net long 138.7k), -4.3k meal (net long 20.8k), and +757 oil (net long 86.0k).
Crop report on Thursday. The USDA will revise old crop demand on the balance sheet and take another look at Southern Hemisphere crops. The corn balance sheet appears more susceptible to tightening in both the domestic and world S&Ds than the soybean or wheat stats for this report. They will not address new crop again until the 30th with the updated acres and quarterly stocks reports.
Overnight, the corn market featured a classic Sunday evening ‘gap and go’; by the AM break, July Corn finished 18 cents higher and Dec 25 cents better. Weather markets are here, and we expect the forward outlook for more ‘warm and dry’ is the primary instigator behind the rip. The weekend itself was very dry and quite hot, though this was expected. Some weather forecasts are calling for better rain odds for the Canadian Prairies this week, but 5 day rain totals still look ‘ok’ at best for North Dakota (a few locally heavy amounts excepted), while dry’ish Iowa mostly goes without. Eastern Belt does get a nice drink and will likely be considered the ‘garden spot’ for now? 6-10 & 8-14 day outlook maps still suggest warm (albeit less hot than prior, particularly in the 8-14 day period) and dry conditions. Crop Progress data tonight should offer the final update on planting (near complete), along with national condition ratings (which may back-slide a bit off a very positive start). On the world scene, there are a few areas of weather concern, namely drying in east-central China. USDA is likely to revise Brazil estimates lower in Thursday’s WASDE; most analysts are trying to sneak below 90 mmt for the full crop versus USDA at 102? One important item to watch is the Goldman Roll; front-running of the N/U spread has weakened it 15 cents in three-and-a-half days.
Darren, David, and Elizabeth