Weekly Market Recap
6/8/2018 4:39:38 PM
Planting progress is pretty much wrapped up so now the market will focus its attention on crop ratings and the weather. Corn ratings are very high right now, the best since 1991. Corn is the only product with good export sales right now. Corn exports this week were the best in 10 weeks. Corn commitments are nearly at the USDA export total already so it wouldn’t surprise me to see a small upward revision in next week’s WASDE report. Corn specs continue to reduce their net long position. They sold 64,000 contracts in this week’s CFTC report. The Specs have cut their long from 240,000 just 4 weeks ago to 140,000 currently. July corn futures are still in a slump and lost 13.75 cents this week to close at 377.75.
The wheat market has been very volatile. World-wide weather has been the driver of the markets with Canada, Australia, Russia, and the US all dry. The world can easily absorb a small reduction in one country but when multiple countries appear to have issues the markets are now very quick to react. Even though July wheat futures had a 35 cent range this week the overall change was only a small loss of 3.25 cents for the week. HRW harvest should start to really start to ramp up next week as the hot and dry weather has accelerated the maturity of the crop.
Beans planting is close to wrapped up and condition scores are also looking great. My data goes back to 1988, and the current rating on beans is the best ever for an initial level. This fundamental data is adding to the bearishness of the trade tariff spat with China. President Trump is proceeding with scheduled tariffs and US farmers are very concerned that soybeans will be a key retaliatory item for China. Soybeans will struggle to rally without a concrete agreement in place. Soybean export sales were terrible this week with the third lowest total of the marketing year.
Cash cattle started to get active at the end of the week with trade being reported at $115. This pushed the basis to $5. Packer margins are still incredibly high at $280, although it is a bit lower than last week’s $310.
President Trump has rejected an RFS reform plan. The plan called for allowing exported gallons to be eligible for biofuel credits in exchange for allowing the year round sales of E15. : WTI futures ended the week lower on falling Chinese imports, a strong U.S. dollar and continued production growth from the U.S. A key meeting between OPEC are Russia is scheduled for June 22 and 23 in Vienna, Austria. AAA is reporting the average price for a gallon of gasoline is $2.934 versus $2.957 last week. Prices remain elevated compared to the same period last year at $2.358.