Corn: July Corn settled down 11 ¼ cents at $4.84 ¼, which is the lowest settlement 7 weeks. New crop CZ settled down 8 ½ cents at $4.80 ½, which is also a 7-week low settlement. Corn posted its high in the overnight session and then trended lower all day. Key technical levels fell today as the weather window looks clear through at least Monday. While there are still approximately 14 million acres left of corn to plant in the northern corn belt, prospects are improving. Those areas still have about 2 weeks left before the prevent plant date. . Exports were 348K MT (higher compared to last week, but 39% less than the 4-week average. Informa today updated its estimate for corn acres to 91.6 million vs. the USDA at 91.7. Finally, the majority of the western Corn Belt had a good 10 to 14 day forecast for the planters to roll. As always, the next bullish weather forecast could resurrect new crop bulls. Time will tell what Mother Nature has planned for us this year. Today’s 7-week low at $4.78 ¼ in CZ came within 2 ¼ cents of the exact 50% retracement of the 3-month, 82 cent rally which comes in at $4.76. Coincidentally, this was the low posted on the March 31st USDA report. That was the last major low prior to the push up to the 8-month high at $5.17, posted on April 9th. Above the market there is still a gap on the daily charts at $4.96 ½ -$4.97 ¼. There is also a 4-month old trend line intersection on the weekly charts at 4.97 ¼ which makes that a key resistance target for the bulls. Hedgers: No change in recommendations.
Wheat: July wheat settled down 12 cents at $6.78 ¼ which is a 1-month low settlement. KCN settled down 27 ½ cents at $7.78 ¾, which is a 3 week low settlement. Wheat posted its high in the overnight market and leaked lower most of the day. Exports were down 83% from last week with net sales of 55K MT. Overnight there was a report that Mexico had imported 30K MT of wheat from the Ukraine. Other reports indicated there were more talks between Mexico and the FSU for more bushels of wheat. The fact that Russia can transport their wheat from the Black Sea to Mexico and still have it is less expensive than US wheat caught a lot of bulls by surprise. WN has now “corrected” 68 cents, or 9% from its 11-month high posted just 7 trading days ago on May 6th, up at $7.44. Technically, WN has resistance above at its 4-month old trend line above at the $7.00 level. A settlement above that level would be the much needed tonic for bullish traders. KCN posted a 3-week low at 777 ¾, marking a 77 ¾ cent correction from its 17-month high posted on May 6th up at $8.55 ½. This also pencils out to a 9% drop in value in 7 trading days. Hedgers: We were able to roll down some of our KCN puts today. With 35 days left to go on the July options and with the market this volatile make sure to take risk off the table when it fits our risk/reward parameters.
Soybeans: July soybeans settled down 16 ½ cents at $14.70 ¼. July posted a 31 cent trading range today and gave us an outside-day-down on the charts. New crop SX fell just 4 ¾ cents to settle at $12.17 ¾. Exports were up 80% from the previous week, at 73K MT. Overnight, SN was supported by higher prices in the Chinese market, but that strength didn’t hold once the wheat and corn started tearing lower. The basis remains strong, but with imports coming from South America, it seems like the tightness in the old crop is a bullish story that is running on fumes now. A bull needs to be fed daily, and with the funds long an estimated 150K contracts of beans, absent fresh fundamental news; the commercials will be willing sellers on key technical levels. The weather report remains non-threatening and some longer term forecasts have not been dwelling on hot and dry. Obviously that can change on a dime, but for now bean bulls are watching to see of new crop SX holds support on the charts down at $12.06 to $12.00 level. The all-important July/November spread dropped 11 ¾ cents to settle at $2.52 ½. This spread is key to watch for speculators and hedgers alike. We have seen it trade between $2.77 and $2.25 ½ at its extremes over that past 4 weeks. Hedgers: No changes in recommendations.
It has been a volatile week in the markets. Tomorrow’s weekly settlements will be very important. With the funds still long, we did not see a corresponding drop in open interest over the past 3 days of lower prices. In fact, open interest rose for both corn and beans, suggesting that commercials have been selling, while the funds, for the most part, have been biding their time and holding their large long position estimated at 260,000 contracts of corn and 150,000 contracts of soybeans. This is the wildcard for producers this year. At the end of the day, Mother Nature and the law of supply and demand will rule the day. If the funds are right, they will deliver profits to producers. If they are wrong and decide to exit, the last 4 days of action might just look like an exhibition game