Morning Comments May 24, 2021

Soybeans2

Our corn and soybean futures are both down double digits this morning as the markets continue to see some of the speculative bulls slowly head for the exit. From a fundamental perspective, everyone seems a little too fat/happy with the current news cycle. I guess that isn’t hard to understand: there were nice rains over the weekend, the nearby forecasts are still warm and wet, and the longer-term forecasts for the summer look less threatening than they did a few weeks ago. Nothing bullish here today.

If we are going to get the corn bulls to come back to the party, it may have to come from the demand (exports in particular) side of things – they want to see headlines. This means the trade will be paying attention every morning to see if we see additional flash sales to China (like we saw last week) or any other confirmation of tightness in the world. Without that? The supply side really doesn’t change much without the USDA feeding us info which means we could be stuck in a pattern here, hoping to stay rangebound until we get into the real growing season in mid-late June and then of course the June 30th stocks/acreage reports.

Flipping to soybeans quick – though we know how tight the U.S. ending stocks are for this year (and presumably next year) there are a few headwinds to price action today. First, this is the time of year when South America takes center stage on soybean exports, which doesn’t give the bulls much for U.S. headlines. Second, beans were planted FAST. While that doesn’t tell us yet how many were planted (a big question mark this year), that is generally a good sign for above trend production. Third, Chinese crush margins are pretty poor. In some cases, in the red, as livestock producers over there are finding ways to replace soymeal in their rations.

Currently:

Corn is 10 to 15c lower

Soybeans are 7 to 12c lower