- Managed funds through the week ending Tuesday were net buyers in corn, wheat and soybeans of 89,000 contracts . Managed fund net length now sits at 179,000 contracts, vs. a net short position of 28,000 contracts in mid-June a year ago. Additional buying occurs if coming NASS data reveals higher than expected US corn/soy acreage loss. Otherwise, the theme into mid-July is volatility.
- End of week selling related to a drier weather forecast and July options expiration put Chicago soybean prices 8-10 cents lower at the close on Friday. On a weekly closing basis, July soybeans finished at a ten-week high and November marked the best close in 13 weeks, but both contracts were nearer to the lows of the week. The Commitment of Traders report showed that for the week ending June 18, funds had covered another 39,000 contracts but were still net short 55,000. Hedgers, on the other hand, have remained slow sellers on this rally and sold 55,400 contracts, for the first net short position since April, of 45,000 contracts. The 2019 planting season has come to an end with most producers having either planted a crop or made their prevent plant decisions. Chicago has added premium for yield risks due to late planting, and the next directional move will hinge on the trade’s confidence in new crop acreage and the growing season weather/yield.
- Chicago corn futures settled 7-8 cents lower. The latest run of the EU weather model is consistent with prior releases as well as the midday GFS forecast. Unwanted rains are due across the Eastern Corn Belt, but thereafter a more normal US summer climate will be established. Most important is that GDD (growing degree days) accumulation will accelerate beginning early/ mid-next week. Managed funds as of Tuesday were long a net 144,000 contracts, vs. 111,000 a week ago. There is room for buying but following the massive transfer in ownership a new catalyst is needed. There is much unknown about crop potential, and how much domestic use needs to be trimmed. However, S American and Black Sea basis hasn’t moved at all following the rally, and despite massive world demand shifting from the US to elsewhere. For now, other world feedgrain markets are content to absorb elevated consumption. Elevated volatility is expected next week ahead of numerous USDA data points. And the battle between production and demand will be ongoing throughout summer
- Chicago wheat futures followed corn lower into the close. Breaking news is absent, but the US market remains overvalued relative to competing origins. Funds as of Tuesday were net long 23,000 contracts in Chicago. Part of this has been liquidated since Monday as the world cash market has failed to follow. Northern Hemisphere harvesting will roll along smoothly. Drier and warmer weather lies in the offing for much of Europe and the US Plains. A major pattern change is also offered to Ukraine and Russia beginning this weekend. Excessive heat ends and will be replaced by temperatures some 4-8 degrees cooler than normal into early July. This will aid later developing winter wheat fields in the Black Sea. And favourable weather will continue across Russia’s spring wheat belt. Wheat rallies will be tied to corn and the coming shift in feed use across the US Plains. However, rallies will be capped as more of the N Hemisphere crop is harvested. Interior Russian prices are beginning to retreat.
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