Weekly Market Recap and Tom's Take, June 26, 2020

Handfulofsoybeans

Market Update:

September corn futures lost 1 1/4 today, ending at $3.19 1/4. That makes the 5th day in a row of lower closes, losing 18 for the week. December futures also had 5 losing days this week, ending at $3.25 1/4, down 2 3/4 today, down 20 for the week.

August soybean futures were down 6 1/2 today, finishing at $8.60, down 16 this week. November beans lost 7 today, and 19 1/4 for the week to close at $8.80 3/4. Both of these also had 5 consecutive losing sessions.

This week’s big story is the meltdown in the corn market on Thursday and followthrough on Friday, especially for December futures. Rather than being attributed to any single issue, it seemed more like a culmination of a lot of negative items coming together on the same day. It feels like the stocks and acreage reports due next Tuesday were part of the concern, as many are expecting bearish numbers. Combine that with decent weather recently and forecasts for more as we head into July, and we were set up for a downturn. Some analysts have said that as many as 25,000 contracts were sold by the Managed Money Funds Thursday. If so, that would put them at or near an all-time short in corn. In just 2 days December lost 10 cents, and 20 for the week, closing lower every day this week. Since the beginning of the year, with all of this downward movement, we’ve never seen 5 consecutive days of lower closes for the December contract. Perhaps the traders are starting to focus a little more on that large Ending Stocks number for the upcoming year. For comparison, Old Crop futures are a little different story, as we’ve seen a couple of times that the July contract had at least 5 consecutive lower closes. Both occurred in March or as March turned into April, before this week’s 5 in a row.

Please note that this week, we started following September futures for our cash corn bids. But, since that month is somewhat new crop, somewhat old crop, we looked back at the July contract to see what an Old Crop month has done since Jan 1.

If you’d like to know more about the factors impacting corn and soybean prices this week, you can tune into our weekly Bull Bear Banter podcast here: https://landuscooperativeexperience.podbean.com/.

It’s free, it’s informative, and it’s for everyone. 

Upcoming Events:

  • Next Tuesday, June 30th will bring a couple of important USDA reports. We’ll see an update on acreage numbers as well as the quarterly stocks report. 
  • Also on Tuesday, all of our former West Central locations will not be receiving grain so that we can move to a different accounting system. 
  • Our next major holiday, July 4th, is only 1 week away.
  • The following week, July 10th is the next WASDE report from the USDA. 

Tom’s Take:

Well, folks here we are, almost at the end of June, and not a whole lot looks better than it did at the end of May or April or March. Coronavirus continues to impact every aspect of society, whether we want to acknowledge it or not. Some parts of the country are getting better, while a lot of the country gets progressively worse. Corn prices continue their long steady slow grind lower. Soybean prices have gotten better since March and April, but just finished a week of lower closes. Crude oil has rebounded nicely from the April lows, gaining $15 to $20 per barrel, but it still hasn’t closed that gap left on the charts in early March. Wheat is trading new contract lows for both Hard Red and Spring varieties. 

All in all, there’s really not much to be overly optimistic about, other than the prospects for a large corn crop in much of the U.S.

It’s usually times like this that I think back to a person I used to work with. He liked to say that it’s never as bad as it seems. I hope he’s right and I have to believe he is. The sun will come up tomorrow and things will eventually get better at some point. Try to stay as positive as you can and weather the storm. I’ve been encouraging people to at least consider locking in some corn against the December of 2021. At the end of the day Friday, it was trading almost 35 cents above 2020 December futures. It may not sound great, but if you could lock in $3.60 futures for that time frame, it might be about the best you’ll see for the next 12 to 15 months. I’m not advocating that for soybeans, simply because there is no carry from this year to next. 

Give it a look, let us know if you’d like to get any offers placed, especially before Tuesday’s reports. 

Thanks, Tom.Guinan@LandusCooperative.com