- Weather woes
- South American production
- U.S. dollar weakness
- Fund length
- Crop progress
- Carry over?
We’ll start with the bear factors this week, as that list of items doesn’t seem to have very much to talk about. Funds continue to hold a very large long in soybeans, as well as soybean meal, and the thinking here is that at some point, they will liquidate that position. When that happens, prices will fall. The only concern is the timing. To date, they continue to defend the position very well.
Corn crop condition scores improved this week in almost every state. The exceptions are Missouri, Michigan, and Texas. For the week, we’re now 75% good to excellent, vs. 72% a week ago. This was the first week for soybean condition scores, and the average is 72% vs. 69% this time last year. All in all, looking pretty good in most of the U.S.
Ending stocks continue to sit above the market, but I would expect them to get trimmed back a bit in the next USDA report, due out on Friday the 10th. We’ll see how much adjustment the USDA wants to make.
On the bull side of the ledger, world-wide weather continues to impact grain prices. From flooding in parts of Europe, with the potential to impact the wheat crop there, and the forecast in the U.S. turning hotter and drier, potentially impacting corn and soybean development, there is plenty to be concerned about. Another 30 days from now, and we’ll know a lot more about the U.S. crops, but that seems like a long time from here.
South American production continues to shrink, in both quantity and quality. Many private forecasters have reduced Brazilian production for both corn and soybeans, and there continues to be concern about how good the soybeans are in Argentina.
The dollar has lost some of its steam in the past few trading sessions, making U.S. products a little more competitive in the world market. That, along with concerns about South American quality should put a little more in the export pipeline this summer, further reducing carry-over stocks.
As always, let us know if you are trying to obtain a specific level for your corn and soybean sales. We’ve seen quite a few people putting some sales on the books, and others leaving offers. We’re here to help, just let us know how we can assist. Contact information can be found here.
- Tom Guinan, Grain Origination Manager