AM Comments 05/06/15
Wednesday, May 6, 2015, 7:05 AM
Submitted by: Dustin Weiner
The corn, soybean and wheat markets were all steady/higher last night – which is a welcome change for our morning comments when compared to the recent trend of overnight markets fading lower like clockwork. The story appears to center around the outside markets which are friendly with crude oil sharply higher (highest level since mid-December) and the $US sharply weaker. You can see below (the cardinal and gold chart) that the $US index has lately been working itself lower (5% drop in the last 3 weeks), which tends to be bullish to commodity prices. If there’s another leg down in this thing, it could trigger some short covering in commodities which would give us a rally.
If a short covering rally does present itself, many would view that as ‘meant to be sold’ because the fundamental news as you can imagine is still giving off a bearish feel. With the corn crop mostly planted and moisture in the ground, the supply side of the equation is feeling more and more comfortable by the day. The demand story is somewhat yet to be written, we are hearing talk that a few bean plants may start reducing crush thanks to poor margins which would weigh heavy on basis/prices if confirmed. Meanwhile the ethanol industry appears to have strong margins which keeps overall domestic corn demand appearing steady/firm even in the face of the bird flu story.
The USDA will be out next week with their S&D and production info which will not only give us a better picture on demand for the rest of the summer but it will also give us our first peek into next year’s S&D which appears to be flush with supply.
Corn 1 to 2 cents higher
Soybeans steady to 2c higher
Have a great day!