AM Comments 06/06/16
Monday, June 6, 2016, 12:06 PM
Submitted by: Dustin Weiner
The markets look to start the week off with a bang as corn and soybeans are both sharply higher as I type this. The weather forecasts shifted warmer and drier through mid-June and the market reacted swiftly overnight. Also adding strength are sharply higher metals and energy markets as today appears to be a “risk-on” market for commodities – crude oil is pushing up to 7-month highs this morning.
To many, seeing above normal temps with dryness this time of year would signal a speed-up in crop development and a window for the unplanted acres to get planted – which normally wouldn’t raise much concern. This year?? The markets are jumping all over this as evidenced in part by higher prices overnight. I guess we shouldn’t be too surprised as the potential threat of poor La Nina / El Nino timing is hanging out there and we are still digesting all of this recent fresh demand news. As we navigate through this week, weather forecasts will start to become more clear in regards to next week which will help determine further price action and risk premium needed. FYI we also have a USDA report out Friday of this week giving us another update on projected carryouts, more on that as we get closer to Friday…
As you know, money continues to flow into the commodity markets - in particular the Ag sector. When looking at the financial picture, you will see that commodities are the top performing asset of 2016. Global equities are up 2%, bonds are up 6% and the Bloomberg Commodity Index is up just over 11%! Friday afternoon’s Commitment of Traders report once again confirmed the money flow as 70k contracts were added to the spec long corn position while the spec long soybean position approaches the recent record. In the case of soybeans it appears that the “long” has been passed from the producer to the spec trader. It could be a rocky ride from here on out on price…
Corn 6 to 8 cents higher
Soybeans 15 to 20 cents higher
Have a great day!
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