Morning Comments June 18, 2021

Corn 062419

Our markets are recovering this morning after an absolutely massive selling spree yesterday from the spec funds, causing one of the biggest price moves in recent memory. Corn closed down the limit (-40c) yesterday while soybeans were down over a dollar a bushel in old crop and down 90c in new crop. This wasn’t just a “risk off” day for the funds, it was a GET OUT day. After the federal reserve acknowledged that inflation was in fact happening and they were going to do something about it sooner vs later (raising interest rates), our $U.S. rallied sharply and everyone’s inflation-hedge trades started to unwind and once that started: the rout was on. The large longs held in commodities (corn, beans, gold, lumber, you name it) got sold and sold HARD. 

So where do we go from here? Well, technically we have done some pretty serious damage to the charts and we need to be prepared for additional downside potential as the funds continue to flush out of commodities and square up their positions. Once the dust settles, let’s not forget that fundamentally we are still locked into a weather market with a huge acreage report from the USDA coming at us on June 30th.

The 6-10- and 8-14-day forecasts have shifted a bit on us, though they still show cooler temps and wetter forecasts right up to the opening of our pollination window. Still plenty of questions remain though because some of the driest areas (from Iowa to the north and northwest) may not get as much precipitation as once thought. The market is also watching the Delta (which is already waterlogged) as a weekend rain event is staring down at them. The longer-term forecasts for the corn belt are also hinting towards more dryness, which means we aren’t out of the woods yet on weather risk premium. Maps below.

Currently:

Corn is 10 to 15 cents higher

Soybeans are 40 to 50 cents higher

June 18 Map 1
June 18 Map 2
June 18 Map 3