Our corn and soybean futures markets are bouncing back this morning after getting smacked hard yesterday with July corn closing limit lower (-40c) and July soybeans finishing almost 60c lower! The market obviously downshifted into a risk-off mode after the USDA report but there may be more to it as it wasn’t just our grains feeling the pain, sentiment may be changing in other commodities too. Seeing some fund longs out there questioning the overall runup in commodities: the $US has rallied a touch while crude oil, lumber, gold, silver, and others have all pulled back from highs. Of course, there are others in the market thinking this is a buying opportunity -- this macro influence/opinion will be something to watch moving forward.
From here it will be interesting to see how these markets perform and respond after taking a hit to the charts. Corn has traded higher “week-on-week” for 6 weeks in a row and that will end today. What’s next? Fundamentally there isn’t much that has changed... Our US weather remains critically important (and still mostly in front of us), the Brazilian crop size is still in question (USDA at 102mmt while many think it's 95mmt or less) and Chinese demand actually feels a little stronger than once thought. The fundamental bull feels alive and kicking, but there may be a slight headwind (at least this week) with overall macro commodities.
Overall, the type of volatility we saw yesterday is something we are going to have to get used to. Between now and when the crop comes off there will be days like this. When you have this much money tied to a market packed full of unknowns.. things can get dicey. In the short term, the emotion of the market could weigh on us here and how the markets respond today and into next week will help tell the story.
Corn is 10 to 15 cents higher
Soybeans are 15 to 20 cents higher