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MARKET COMMENTARY

AM Comments 06/24/16

Friday, June 24, 2016, 12:06 PM
Submitted by: Dustin Weiner


Our markets are lower this morning, following along with many other sectors in the world as “Brexit” became a reality with 51.7% voting for the UK to leave the EU and 48.3% voting to stay.  Those of us in the grain world who watch corn/soybean prices have seen volatility before and we know what it’s like to get abrupt “market moving” news. But we also know that it’s an even bigger deal when we get big news like this and the market was leaning the other way! Today it seems that the financial sector was clearly expecting the Brexit vote to fail, evidenced by the huge swings in value we are seeing. Heck – even right before the polls closed some “experts” were predicting a 75%/25% vote in favor of the UK staying in the EU. So here we sit, the market whiffed on the Brexit prediction, British Prime Minister Cameron has resigned, and we are left picking up the pieces.

 

What does this mean to our corn and soybean futures??  Well, the big factor here is the $US which is screaming higher this morning while the Euro is taking a beating. Remember, a firm $US makes our commodities look more expensive to the rest of the world. I’m guessing a macro move like this is causing many of those fund longs to think long and hard about their long positions.

 

Overall, today could be a wild one as the market has a lot of work to do to sort through the emotion and see what this all really means. Looking fundamentally at our corn and soybean crops – the focus will remain on weather.  The latest drought map was out yesterday (shown below) and it shows the drought conditions advancing a bit from last week... However, it is important to note that this map does not reflect the rains from the other day. Looking ahead, many of the dry areas on that map have rains forecasted which even without the Brexit shock could have been hard for the bulls to overcome today. Next week will be big as the final planted acreage AND the quarterly stocks reports are being released Thursday June 30th.  Also, by the time we get to late next week we will (in theory) have a more accurate weather forecast which would cover the critical pollination window on corn. Anything friendly in either of those inputs (USDA or weather) and we could see a quick snap back in prices.

 

Currently (and this is bouncing around a lot):

Corn is 12 to 14 cents lower

Soybeans are 20 to 25 cents lower

 

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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