CORN: Like all of our grain markets the corn market has had a large contingent of non-commercial players being short in the market over the last several months and it is still there. We are entering a time when corn planting is well underway, and any planting delays might make those shorts nervous. You could surmise that over the next 30 days this nervousness might take some of these people out as positions change and drives the corn price higher. If there is nothing like that and at the end of June it looks good, these short players will likely be back. The USDA progress report shows that we are behind last year planting progress as wet weather has inundated many parts of the corn belt. However, keep in mind that the crop can go in quickly and too much rain is never really looked at as a bullish factor for price. Doesn’t “rain make grain”? As farmers, we know that is not always the case but from 30,000 feet, speculators and grain traders often think that way. The December 2024 corn contract is currently priced at 11.5 cents below the March 2025 contract which is a bearish indication of new crop corn demand. Seasonally, we know that corn prices tend to peak in early June and bottom out in early October. The December 2024 futures contract is at the 39th percentile of the past five-year price distribution range.
SOYBEANS: The USDA continues with their penchant for not cutting Brazilian soybean production as much as private estimates have. For instance, they reduced it slightly to 154 MMTs. Pre report hunches had the USDA cutting it further, but this did not happen. However, even if you cut 14 MMTs out from Brazil’s production, it’s still hard to see this as a bullish situation. There have been all kinds of disastrous flooding in southern Brazil causing some angst for traders as this would not be reflected in the USDA report. The pictures of combines working through water have been impressive as well as some grain structures being impacted. However, at this late stage it will not impact Brazilian soybean fundamentals significantly. The November 2024 soybean contract is currently priced 8.25 cents below the March 2025 contract which is considered neutral to bearish for new crop beans. Seasonally, soybean prices tend to peak in early July and bottom out in early October. The November 2024 soybean contract is currently at the 50th percentile of the past five-year price distribution range.
WHEAT: What is up with the wheat price? We have had quite a run up in the wheat price over the last month with May 10th being the time to sell. I think you have to ask yourself the question how much was this with nervous shorts in the market versus any type of fundamental rise? We’ve all known that non-commercial players were short in all the grain markets. Its been true especially in wheat with short covering partially causing this price appreciation. However, there have been problems in France with wheat as well as Russia. Needless to say, whatever it is has presented a marketing opportunity. With wheat usually in a chronic bearish situation, $8 cash wheat in Ontario is welcome news. Of course, this reflects the lower Canadian dollar coming together with a 70 to 80 cent rise in the price of wheat since March. As it is, the Ontario wheat crop in mid-May looks very good ahead of normal as fungicide and herbicide application is being made. Of course, as we look ahead there is always production risks to wheat as well as quality issues on the grading table. We move forward with caution.
