Markets taking a breather this morning after a wild week of higher trade. Corn is currently down 4 and soybeans are down 7.
Prior to todays pause the markets gained 60 cents in old crop and 40 in new crop. South American weather concerns along with cooler temps early in the week for the US gave the funds the fuel needed to continue the climb. After yesterdays close, the funds are reported to be long a record 540,000 corn futures. They are also long 212,000 soybean and 59,000 wheat contracts. They have added 130,000 contracts to their corn position this week. While this has led to some great opportunities for anyone long corn, it does cause concern in my mind. At some point these firms will want to take profits and trying to guess when and what will trigger the selloff of their positions is impossible. My advice is for producers to continue to make sales (corn, soybeans, wheat) on the way up and not look to hit a homerun on everything.
Daily price limits for Chicago Board of Trade grain and soy futures will expand in May following a routine half-yearly review, CME Group Inc, parent of the exchange, said on Thursday. The new limits go into effect on May 2, for trades dated May 3, CME Group said, potentially increasing volatility. The wider daily limits follow the exchange operator’s move on March 15 to expand speculative position limits, raising the number of CBOT futures contracts that non-commercial traders can hold. The daily limit for corn would increase from its typical $0.25/bushel to $0.40/bushel for today’s trading session.
CBOT also announced corn futures maintenance margins would increase by $200 to $1,700 for May 2021. Similarly, margin requirements for soybean trades will increase by $475 per contract to $3,825. The Minneapolis Grain Exchange also announced yesterday afternoon it would raise its maintenance margin on spring wheat contracts by $500 to $1,900 per contract for May and July 2021 futures.
The Biden administration hopes to convince farmers to set aside four million more of acres of land for conservation this year by raising payment rates in an environmental program, but farmers said surging crop prices make it a tougher sell. The push to enroll more land into the 36-year-old Conservation Reserve Program is a part of the administration’s campaign to counter climate change.
Have a Safe Day!