Written Commentary
SOYBEANS
The entire soybean complex surged higher today with beans up $.38 – $.50 led by new crop, meal was up $18 – $22, while oil was 125 – 145 higher. July-23 soybeans surged thru its 100 day MA, trading up to a 2 month high. Next resistance is $14.71, the 100 week MA. Spot soybeans have surged nearly $2 off last month’s low. Nov-23 soybeans are up $2.15 from last month’s low. Spot bean oil traded above $.60 lb. for the first time since early March. Next resistance is 62.68 the 50 week MA. I look for another 3 – 5% drop in G/E ratings in next Tues. crop condition report. By shaving 2.5 bpa off this year’s yield forecast of 52 bpa, equaling last year’s yield of 49.5 bpa, would drop US ending stocks to only 131 mil. and stocks/use to 3% placing the US in an extreme rationing situation. So far this years growing season high in Nov-23 beans is up 8% from its Q1 low, below the historical average of 26%. In examining only years when the Q1 low was above $12.00 (3 before 2023, red dots on chart) the average high was only 18.6% above the Q1 low. Volatility is certain to stay high for the foreseeable future.
CORN
Prices are up another $.17 – $.24 today with new crop leading the surge. Ongoing drought conditions across a large section of the Midwest continue to fuel the price surge across the agricultural space ahead of the 3 day holiday weekend. Today’s forecasts are similar to yesterday’s with heavy rains across the SE while little to no moisture is forecast for much of the northcentral and eastern corn belt over the next week to 10 days. The western corn has the best chance for normal to above normal rains during this time frame. Periods of extended heat appear to be confined to Texas and the gulf coast region. The placement of the high pressure ridge for late next week will greatly impact opening prices on Monday night. Spot corn has closed a gap on the weekly chart. Next resistance for July-23 is the April high of $6.47 ½, which is also very near the 100 week MA at $6.49. Today’s high in Dec-23 corn stopped just shy of the February high of $5.98 ¾ and is $1.07 over last month’s low. US corn yields would need to fall roughly 15 bpa to 166.5 bpa in order for ending stocks to slip under 1.0 bil. The last major drought to impact the US Midwest corn yields was 2012 when the average yield was cut 32.5 bpa from May to final, or 20%. A 20% cut to this year corn yield would require roughly 1.5 bil. bu. of corn usage to be rationed to keep supplies at pipeline minimum. I look for crop ratings to slip another 3-5% in Tues. crop condition report. So far this year’s high in Dec-23 corn is only 9.2% above the Q1 low of $5.47 ½, below the historical average of nearly 26%. In examining only the years when the Q1 low was above $5.00 (4 before 2023, red dots on chart) the average high was 39% above the Q1 low. History shows that if Mother Nature isn’t cooperative over the next 60 – 90 days this weather driven price surge could still have a ways to go despite the weak demand environment.
WHEAT
Prices were sharply higher across the board with Chicago and KC up $.26 – $.32, while MGEX was $.20 – $.24 higher. Chicago July-23 has surged thru its 100 day MA stopping just shy of $7.00 before pulling back. Next resistance is the April high of $7.17 ¼. KC July-23 surged thru both its 50 and 100 day MA resistance. Next resistance is $8.77 ½. Russian officials state that an extension of the Black Sea Grain Initiative is “impossible” under the current circumstances. The deal is set to expire in just over 1 month. The pace of vessel inspections thru the Black Sea corridor by the Joint Coordination Center fell to only 1.7 per day in the first half of June. That’s down from 3.1 in May, and well below the peak of 10.6 in Oct-22. Look for WW crop conditions to improve another 1 – 2% in next Tues. crop condition report while spring wheat rating likely to slip 1 – 2%.
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