Mark's Market Talk

Jun 27, 2022

We all knew sooner or later we would have a big move down at some point. Well that point came last week as all commodities went south fast. Several events joined up to accelerate the move down. The world veg oil market almost collapsed as several sources such as canola and palm oil markets broke. This happened for the same reasons those markets went higher, just in reverse. World trade and politics are big drivers and the markets have been overly affected by such things. We came into last week with a hot and dry forecast that was expected to last all week. Then mid-week it turned cooler and wetter to finish the week. The funds have been heavily long the corn and bean market. Some of these traders have been there for a long time and they saw this as a time to exit with some nice profits. Higher interest rates is making owning futures more expensive and that may have been part of the incentive to bail. At the end of the week July corn was down 34 cents while the Dec contract closed 57 cents lower. Meanwhile July beans ended the week 91 cents lower and November was down 1.13. Fortunately, Friday was a bounce back day or things would have been uglier. We have a major report coming out this Thursday as the USDA releases their June planting report that will update acreages and projected yields. This report will give us lots to talk about and will help guide the traders into pollination. Weather, the Ukraine war, and world politics will also continue to move the markets. Corn traders will concentrate on the mid-July weather as corn enters pollination. A lot of acres got planted in a short period of time, so that means all those acres will pollinate at the same time. We could easily see a 5-bushel swing during this time. Corn acre expectations are coming in around 700,000 acres less than the March estimate. This is primarily due to the wet weather in the northern plains. This would be a bullish acre report if it does materialize. But remember this is a government report and anything can happen. The bean acres are expected to be close to what was predicted in March. If we see trendline bean yields the carryout for beans will grow enough to take some of the current premium out. However, if we have a hot and dry late season and we lose a couple of bushels we will head right back up. Looking down the road 2 or 3 years if most of the new soybean plants become real, it will take a lot more acres of beans. Bean oil may become the new ethanol and it could get exciting.