Wheat rallied for the 6th day in a row which helped corn today. For the day, Chicago wheat was up 7 cents and KC wheat was up 7 to 10 cents, and Minneapolis wheat closed 12 cents higher. Corn closed 3 cents higher, while soybeans closed 1 to 3 cents lower. At the lows today, old crop soybeans were down over 15 cents. New crop soybeans closed up a penny.
The stock market got shell shacked earlier in the day, trading over 700 points lower as investors worry about slowing growth and rising interest rates. The Dow Jones index closed down 375, while the NASDAQ lost 100. Interest rates put in 5 month highs today on the 10 year yields. Crude oil shrug off the weakness, and closed 97 cents higher, and the dollar index lost 0.265 points. Gold rallied $6 an ounce today.
Export sales announced this morning came in strong for corn and mediocre for soybeans and wheat. Corn export sales totaled 51.1 mln bushels for the current year plus 10.3 for next year, while soybeans were 7.7 mln plus 4.4 mln bushels, and wheat was a combined 16.7 for both the 23/24 and 24/25 crop years. The leading corn buyer this week was Mexico who purchased 15.3 mln bushels on the week, followed by South Korea at 9.9 mln bushels. Below we show the actual sales vs trade estimates.
The wheat market continues its move higher as fund liquidation still continues. The funds are still short 400 mln bushel of wheat, 1.33 bln corn, and 753 mln bushel of soybeans. Concerns on Russian dryness as well as dryness in Europe, Ukraine and the Black Sea area keep fueling the wheat market. In the US, it appears some of the dry areas of Kansas could get some rains, while the eastern US soft red areas are getting too much rains. One market commentator said “Wheat is taking no prisoners right now”, suggesting that there could be more room to run for the wheat. As the July ’24 chart below shows, it’s been an impressive 6 day, 70 cent rally in wheat, and the July contract is now within 8 cents of the 200 day moving average. The last time wheat was above the 200 day MA was back in July 2023. Wheat blew thru the 100 day MA on Tuesday.
The July ’24 corn/wheat spread has made a 58 cent move since last week, and now at the widest levels since last August. The spread closed at $1.68 ½ premium to the Chicago July Wheat contract. We looked back at the weekly charts, and during the summer of 2022, the July ’24 Chicago wheat contract held a $3.60 premium to July ’24 corn. We show the daily spread chart below since wheat usually pulls corn higher at some point. If wheat wants to rally another 50 cents or $1.00, will that help corn rally much, if any with a different set of fundamentals driving that market?. Also of interest, note the double bottom on the charts on the corn/wheat spread near 90 cents back in November and March, which means wheat held just a 90 cent premium to corn.
Soybeans ended the day 1 to 3 cents lower, but well off the lows. Yesterday saw the first down day in 5 days, so a little set back is not all that unexpected. July ’24 soybeans are flirting with the 50 day MA, while the 100 day MA is 52 cents away at $12.32, and the 200 day MA is way up at $12.96. The first hurdle will be the $12 level on July. Note that there is still an open chart gap from late December in the $13.05 to $13.11 area. The chances of that gap getting filled seem like a long shot today, and would need a shot of bullish news to reach that level.
Corn was able to regain part of yesterday’s losses to close up 3 cents. Wet weather concerns have spooked a few of the shorts, and the rally has spurred some new farmer selling, Below we show the July ’24 daily futures chart. Corn has been able to close 4 days in a row above the 50 day MA ($4.44), and a flag formation is forming on the charts. The 100 day MA is at $4.62 and the 200 day MA is at $4.96. Like we discussed in the wheat comments above, a rally in wheat would really help corn, but don’t expect a penny for penny rally. As wheat prices go higher, we could see some wheat feed rations switch to corn, and also possibly see some new corn export sales take place due to higher feed wheat prices around the world.
The latest drought monitor was updated this morning, and some improvement was seen in parts of the Midwest and Northern Plains, while parts of Kansas saw conditions decline. The updated weather forecasts still look WET, with some local forecasts of 3 to 5 inches of rain expected to fall by early next week. Planting progress has been spotty this week, even in areas where it is dry enough to plant, with planters sitting in the shops. How much corn or beans do you want to plant looking at that expected rainfall map?
That’s all for today. See you here tomorrow.
