June 17, 2019: Mark's Market Talk

June 17, 2019
Uncertain weather last week prompted the grain markets higher as some areas failed to finish planting. It has also started to sink in that a lot of the corn acres were planted late which will lead to lower yields. For the week July corn was up 37 while new crop advanced 30 cents. Basis levels remained strong as the farmers who own old crop have closed the bin doors. Everyone is afraid they will sell too soon and miss the high. We are starting to hear the 5.00 number thrown around. It may happen but as we work higher we will see US corn getting priced out of the export market worse than it already is. However if we get some imperfect weather this summer our reduced acres will produce less corn than currently projected and then we would be off to the races. In the meantime this market is telling us to sell into it. Old crop owners are being given an unexpected opportunity to make some profitable sells and there sure isn’t anything wrong with that. For those that got their corn planted timely we are seeing some new crop prices we haven’t seen for years. Again there is nothing wrong with selling into a higher moving market. It’s tough to hit all home runs in marketing. Singles and doubles are far better than sitting back and striking out after the rally fails and the market crashes. The long anticipated E15 announcement was made last week opening the door for year around sales. This won’t all happen overnight as most stations will have to upgrade to handle the product. Long term it may help make another 1 million bushels go away each year.  Beans enjoyed a good week also as both July and November beans ended 41 cents higher. It would be easy to say they were just a follower of corn but there’s more to the story here. Bean planting has been delayed and some of what did get planted looks tough. If the current yield projection drops by just 3 bushels an acre to a 48 average we lose 250 million bushels. If 4 million acres go unplanted, or they went back to corn, that’s another 200 million bushels. And if we settle with China suddenly beans are too cheap and the price will head higher. That’s a lot of hoops to jump thru but that is what the traders are looking at. The funds are still short the bean market so talk like this could be the spark to trigger their investment. Traders by nature hate to be short beans and they are looking for reasons to go long. When or maybe if, this happens we could see a fast jump. Or we find that the beans do get planted, we have great summer weather, and the China deal doesn’t happen. In that case producers will continue to bleed. Let’s hope the first scenario happens.    
 
Posted: 6/17/2019 12:21:26 PM by Rob Matherly | with 0 comments