- Some fund short covering was noted in Monday trade in wheat and soybeans. Corn appears to want to stay with recent lows and the market appears reluctant to cover those shorts – right now, suggesting that technical chart issues are more of a focus than fundamentals. It looks highly possible that we may, just may, be forming a chart “top” in soybeans and wheat, with a mid-week a likely time frame – if it occurs!
- The soybean (July) chart looks to be testing the higher end of the downtrend channel, which has been in place since the season top formed last November. A close, basis the July contract, above $9.90 would break the downtrend. Our “top forming” comment above coincides with the spot soybean/corn ratio pushing out to 2.8:1 Monday, which is the same ratio at which the market topped in late February!
- After the close, NASS reported that US soybean planting progress had advanced to 90% through Sunday. Crop condition ratings inched lower with good/excellent ratings at 65%. The index of all crop ratings was lower but, remained well above the long term historical average which would justify a 46 bu/acre yield. We see this recent rally as being largely technically driven as trader’s position ahead of major USDA reports next week, as well as the end of month/quarter. Technical rallies usually end once prices have reached key technical targets, which we see at $9.90-10 July and $9.60-9.70 November. We expect a summer high to be traded in coming days with prices to slide lower into the June 30th report.
- Nationally, the US corn crop is rated as 71% good/excellent, down 2% points from last week and a year ago. As expected, substantial declines (11-19%) were recorded across IL, IN, OH and NC due to adverse weather. Partially offsetting this were moderate boosts in CO, SD and MN. Current conditions will not cause NASS to change their yield estimate in July. Early yield models suggests a national US yield of 165-168 bu/acre. Next week’s crop progress will include % silking. Corn in S IL will start pollinating next week.
