CORN bears are pointing to what many producers in big production states are calling the best planting conditions they’ve seen in several years. Bulls are pointing to extremely cool temps in the forecast – possibly below 30 degrees – and some important areas where producers have already been planting into cold soil temps. The fear is root development problems, increased variability of emergence and perhaps a higher risk of insect and disease pathogen pressure down the road. Let’s also not forget a corn seedling’s growing point is below ground until V6 – the sixth leaf state – meaning it can generally withstand short stints of freezing temps until the V6 stage. In a worst-case scenario, I suspect most producers still have plenty of time to re-plant if weather delivers the extreme. I put together a very elementary chart below that compares corn and crude oil. As you can see, when crude oil prices fell out of their $50 to $60 dollar range, July corn fell out of its $3.80 to $4.20 range. Unfortunately, I don’t think corn prices will recover as quickly if crude oil bounces back higher, there’s just a lot of new dynamics and headwinds to consider. It’s going to take some time for demand to rebuild… and without a weather story that’s all we have.
SOYBEAN bulls are happy to see a little Chinese buying but technically it feels like the bears are still in control and the price trend of lower-highs and lower-lows remains in effect. As a spec, I continue to hold a small bullish position but completely understand we will need a full-reversal of some sort to turn the trend around. Meaning we will need to see a significant enough wave of bullish headlines to change and entirely shift the flow of water. I’m thinking the only headlines that will have that type of power and ability to do that type of heavy lifting will be a major wide-spread weather worry or some proof of significant Chinese buying. Here at home, the new-crop acres are obviously going to get in the ground in a timely fashion, the question remains just how many and how will weather play out in July and August? As a producer, I only have 30% of our estimated new-crop production priced but still want to wait around and see more cards flipped over before pricing any additional. Very little fresh or new in the headlines. I should note, Brazil, not the U.S., may have the most coronavirus cases in the world though the trade doesn’t seem to care at the moment…Funds are much more interested in U.S. and Chinese political relations.
WHEAT bears continue to point towards improved rainfall in the forecast for the Black Sea region and the European Union. Many inside the trade are thinking Russian and Ukraine yields could well improve if the rains fall as forecast. We are also seeing continued bearish headlines pointing towards much better conditions in Argentina and Australia. Bottom line, there’s actually more talk circulating of perhaps new record global production. I suspect we will learn more next Tuesday when the USDA releases its May domestic and global supply and demand report. As a producer, I worry that without a bullish demand story from China happening real soon or a major unforeseen weather hiccups, rallies could be fairly limited during the next few months.