- HEADLINES: Ag meltdown continues; Markets heavily oversold.
- Chicago Ag markets have been sharply lower on follow-through technical selling on Thursday. Soybeans have paced the decline as both July and November soybeans have fallen below their respective 100-day moving averages. Both old and new crop soybeans have traded down more than 60 cents this morning. Corn has been a close second, with new crop leading corn prices lower on similar technical liquidation as December corn fell below its 100-day moving average and has fallen 47 cents. Wheat has been the price leader in recent weeks but has been the follower on this morning’s decline and traded 38-40 cents lower.
- The USDA did not announce any corn or soybean export sales following Wednesday’s sharp break. But today’s selling has driven prices back to levels that should start to find export demand. We expect that corn and soybean sales announcements could show up on Friday and continue into early next week. The weekly export sales report has been delayed until Friday due to the earlier week holiday.
- Reuters is reporting that officials from Germany and Britain are planning to push world leaders for temporary waivers on biofuel mandates at the upcoming G7 meeting to increase world food supplies. Unfortunately, the mandates for many countries (like the US) are built into laws that will be difficult to change or modify. And a unified change in global biofuel policy would send already high global energy markets sharply higher. Moreover, reducing biofuels does not align with the Biden Administration’s pledge to increase renewable fuel use.
- Other market news is limited this week. But traders remain cautious of historical seasonal trends ahead of the June Acreage and Quarterly Grains Stocks. Yet, cash corn and soybean bids have soared on the Chicago break. IA ethanol bids have jumped to +85 to +100 (July) on this morning’s break. We maintain a long-term bullish outlook on tightening global supplies.
- Chicago brokers estimate that funds have been net sellers of 15-20,000 contracts in corn, 3-5,000 contracts of wheat, and sold 7-10,000 contracts of soybeans. In the soy product markets, funds have sold 5-7,000 contracts of soybean oil and 3-5,000 contracts in the soybean meal market.
- In other US financial markets, crude oil is marking the tenth consecutive day lower. However, liquidation has been less intense today, and losses have not been as extreme in recent days. US stock indexes are inching higher, and last week’s lows have gone untested this week.
- The midday GFS weather forecast is little changed from the morning run. Cooler temperatures will be widespread beginning Sunday, with mild readings probable throughout the entirety of next week. However, meaningful rainfall will into June 30 will be confined to ND, MN and portions of Canada. There are hints that better rain chances develop in KS, MO and IL July 2-3, and whether these stays featured in near-term forecasts is critical. The midday GFS forecast remains at odds with the morning runs of the EU and Canadian models regarding Central US ttemperatures through early July, but extreme heat is likely to be confined to the S Plains, Delta and far Southern Midwest.
- The collapse in ag markets across the world has been dramatic. We can find no real catalyst for the break other than prices were high, with many at record levels, and bull markets must be fed constantly. Markets are not accounting for potential N Hemisphere yield loss or tight June 1 stocks, but the risk of tight stocks and continued dryness in July remains very much intact. Sales are not advised at current prices.