Commodities have been a yoyo this morning. Corn and soybeans opened slightly lower (2-3 cents) then sold off dramatically (15-20 cents) and have now bounced back to unchanged. Welcome to Volatility! Yesterday was a huge risk off day in the corn market as technical trading kicked in as limits were hit.
Corn futures have lost nearly a dollar in the past week which represents the largest percentage drop for a July futures contract since 1973! Favorable weather forecasts for the central US has funds lightening their previously long positions. We also continue to hear rumors regarding China canceling or rolling old crop corn purchases. While these have not been confirmed, where there is smoke there is fire.
The 10 day forecast for South American weather remains much the same today. Complete dryness will be ongoing in Mato Grosso, Goias and Minas Gerais, which combine to total half of Brazil’s corn growing area. The lack of rain will also keep river levels historically low in parts of Brazil, Argentina and Paraguay. This will lead to increased freight charges and logistical headaches for the coming months.
Argentine port workers said on Tuesday they would hold another 48-hour strike starting at midnight today (Wednesday), after a similar strike halted agricultural exports from the country last week. Port workers in the country are unhappy with measures being taken as the pandemic persists and are asking to be deemed ‘essential workers’ and, thus, become eligible to receive the vaccine.
Have a Safe Day!