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MARKET COMMENTARY

AM Comments 06/03/16

Friday, June 3, 2016, 12:06 PM
Submitted by: Dustin Weiner


The soybean market continued to march higher overnight led once again by the front month as July soybean futures were up double digits while November futures were up just over a nickel. The “news” on why soybeans are rallying can be varied, sometimes laughable. I think I read two different wires yesterday talking about the US soybean crop with one stating the reason for the rally was the dry forecast while the other said the reason was due to recent wet weather. The corn market was relatively quiet – and has been – as most of the craziness has happened in the soy complex. Corn prices have been pulled higher though, and new crop prices are giving producers a chance to lock in break-even levels and many are taking advantage as they all remember that feeling they had two month ago when corn was in the $3.20’s…

 

If you are asking us for a fundamental reason for the nut-house that is the soybean market? Well.. from where we sit this appears to be demand driven. With the recent export business done (appearing to be for Aug/Sep shipment) it is starting to feel like the good ‘ol U.S. of A. is the only game in town if you are looking for old crop beans. Brazil appears tapped out and Argentina’s supplies (and quality to some extent) are dwindling. You couple that with US soybean crush margins expanding substantially and here we have a market that has punished anyone who dared to remain short.

 

Now where do we go from here? Good question. The funds are long and strong – and I doubt they flinch much until we get deeper into the growing season.  That doesn’t necessarily mean we take bean prices to the moon, the funds will have to roll out of the July soon which could get messy in Chicago as they move longs out of the July and into something else (the Nov?). Cash basis across the US could also get sloppy pretty quick as exporters, crushers and warehouses all attempt to navigate an inverse (that no one saw coming) that could/should collapse at any time. Once the cash market stops bidding off of July futures, determining what beans are worth gets harder to quantify.

 

The weekly export sales report will be out at 7:30 this morning (delayed a day because of the holiday Monday).  While this report isn’t usually a major deal… the soybean market has pushed higher overnight, while the corn and wheat markets are sitting fairly still - potentially waiting for that report before making a move.

 

Currently

Corn is 1 to 2 cents higher

Soybeans is 6 to 16 cents higher

 

Have a great day!

 

@landuscoopgrain

 

 

Dustin Weiner
2321 N. Loop Drive, Ste. 220 Ames IA 50010-8218
O: 515-817-2144 | C: 515-460-3228
Dustin.Weiner@landuscooperative.com

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