- HEADLINES: Massive fund selling pummels Chicago prices with GFS weather forecast staying wet for Midwest; Just out, Canadian model reduces rain for W Midwest/N Plains.
- Chicago futures are sharply lower at midday as funds take risk off the table. Soybeans, soyoil, corn and even wheat futures are sharply lower on the prospect of Central US rains and a firming US$. Gold has dropped more than $90/oz to best reflect the “get me out” mentality. December corn futures have fallen to the lower end of support at $5.40 while November soybeans have dropped below chart support at $13.00. The waterfall decline in soybeans is based on massive speculative liquidation in soyoil futures, which was the cornerstone of the demand soy bull based on renewable biodiesel investment/demand. Chicago volume has picked up on the decline as key technical levels were triggered. July corn futures fell sharply once the 50-day moving average was breached at $6.52. November soybeans fell sharply once support at $13.00 was exceeded. Scale down buying is noted with commercial sources reporting that China is back looking for new crop soybean offers. A sharply lower close is expected with Friday’s trade to be about an important weather weekend. At these prices, the rain must fall, or crop yield has the potential to fall off a cliff in July.
- Chicago brokers estimate that funds have sold a large 24,000 contracts of corn. And managed money has also sold 11,000 contracts of soybeans and 4,500 contracts of wheat. In the soy products, funds have sold 3,200 contracts of soymeal and upwards of 7,000 contracts of soyoil. Funds are active sellers.
- Questions abound on the Biden’s Administration’s policy on biodiesel and ethanol, but importantly, there does not appear to be any change on the commitment to reduce carbon through renewable fuels such as biodiesel. There were over 20 groups that pressed Congress late Wednesday to begin working on US Clean Air Policy that will help in reducing carbon emissions. The groups made an appeal to the House Energy/Commerce Committees and the Senate Environmental and Public Works Committees. Biofuels are cornerstone/steppingstone to decarbonisation/electrification. We see no coming change for renewable biodiesel tax credits and plant completion and start-up dates.
- US weekly export sales were disappointing. For the week ending June 10 the US sold 10.5 million bu of wheat, 0.7 million bu of old crop corn and 10.9 million bu of new crop corn, and 2.4 million bu of old crop and 0.2 million bu of new crop soybeans. The sales pace was just poor. The US has sold 2,729 million bu of corn (1,096 million more than last year) and 2,264 million bu of soybeans (649 million more than 2019/20. US 2021/22 wheat sales stand at 213 million bu, down 20 million from last year’s pace. China cancelled new crop US soybeans but bought additional old crop. FAS announced the sale of US soymeal to the Philippines this morning. Brazilian fob soybean basis keeps rising on the Chicago decline.
- The midday GFS weather forecast is like the overnight run with short waves embedded within a southward sagging jet stream producing rain for Iowa/Illinois and much of the E Midwest on the weekend and through much of next week. Rain totals for Iowa/Illinois/ Wisconsin and Michigan are estimated in range of 1.00-2.50″ with locally heavier amounts. The best rain is slated to drop across the Eastern Iowa, Southern Wisconsin, and Northern Illinois with 10-day rain totals over 2.50″. The remainder of the Midwest receives 0.4-1.50″ with only the Plains short changed. Heavy rains would exacerbate the flooding across the Gulf States with a tropical storm to make landfall across New Orleans on Saturday. A strong ridge rebuilds across the Southern US with additional rain for Iowa/Illinois.
- It is a get me out day with November soybeans back to where the rally started at $12.50 following the March Seeding Report. Research argues that corn/soybean values are too cheap, but with rain slated to drop on the weekend and next week, traders will wait until Sunday for any new buying. The volatility of Chicago prices is amazing. Western Midwest crops are under acute stress, it had better rain in abundance next week.