Markets are taking a risk off approach today with corn down 10 and soybeans down 24.
Some rains have fallen in South Dakota this morning and the totals are .2-.9 inches. The forecast looks a little bit wetter overall from yesterday on the 10 day outlook by the EU. The GFS is not as wet as the EU and doesn’t have the placement of rain in Iowa. Other than Missouri, there isn’t a significant rain event in the forecast that would drive the markets to sharply lower prices today. The longer range forecast has the Ridge returning out West in the 9-15 day period. More 100 degree temps are expected to come in August. This will not be good for soybeans if proven true and there are not enough active storm systems to keep ratings from slipping.
I don’t think todays selloff has much to due with trains and more to do with the fact we are at week and month end. Monday’s have been a mess for the last two weeks and we have seen all kinds of spreading between different contracts. This sloppy trade has moved most of the “trend is your friend” traders to the sidelines as they are getting worn out by false signals. All in all we have traded back to the middle of the range and are keeping a high price. Until there is some consistency or actual weather models confirmed this market will act like an elevator on any news. Based on projections and how good things are looking in the east I would say our upside heading into harvest is limited. Demand for old crop is almost gone as we are now seeing harvest in the south. Most end users are covered or have very little left to buy to get them to new crop. There are several ethanol plants across the country that have idled production or are running at reduced rates due to poor margins. Producers sitting on old crop are walking a fine line on when to sell. Basis levels are still pretty firm, but I would expect them to break hard in the coming weeks.
Have a Safe Weekend!