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Corn, soybeans and wheat all in the red on Friday

The markets are mostly trading the weather now as market waits for June 30 reports.

Missed some market news this week? Here's the market news of the week for you to review or read for the first time.

Ag Marketing IQ

After the explosive price movement a year ago, 2020’s price action in corn and soybeans feels almost comatose. But all hope is not lost for market bulls as chart action continues to be construed positively.  July Soybeans scored a fresh high for the move mid-week and managed to close above the 100 Day Moving Average (DMA) for the first time since January 17.  With the move over the 100 DMA, it technically opens the door to test $8.81 ½ which is 38% retracement of the January high to April low. If the market takes out the retracement target, the high scored on March 25 at $8.98 and the 50% retracement point of $9.01 will be the next upside target zone.

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New crop futures spent nearly three weeks trading narrow ranges, 20 cents for November soybeans and less than a dime for December corn. While both stayed above April lows, such constricted movement doesn’t last forever, especially during the growing season. With crops in generally good shape, forecasts for warm and generally wet conditions for much of the next two weeks suggests the path of least resistance could be lower. Barring a sudden shift in those forecasts, the only real hurdle for markets over the next six weeks is June 30 reports on acreage and June 1 inventories. Neither seems likely right now to be capable of producing enough bullish news to force traders to reset expectations.

The markets are mostly trading the weather now. If rain makes grain, we took a big step closer to trendline yields this weekend as most of the corn belt caught at least some rain.  It would appear the spring price rally we were hoping for left much to be desired.  It is not as if the market has not given us any rally, it has just not given us the rally that we want (or need). The spring low was set on April 21st at $3.09. As we come to the end of June, July corn has been staying above the 20-day moving average like it is riding a wave for the last thirty days. It fell off that wave yesterday, which could be signaling that the rally, what little there was, is now over.  Bull markets need to be continuously fed with new information -- otherwise the bears take over.

Tis the season. Those with crop in the bin are deciding if they should sell it, or keep storing in hopes of a further price rally in grain futures. First notice day for July grain futures is next Tuesday, June 30. That means anyone who is long July grain contracts in the futures market needs to exit those long positions by the close of business on Monday, or be at risk of physical delivery. It also means that farmers who were using basis contracts (based off the July futures contracts) for cash marketing, must decide very soon to either price out the contract or roll it out to September. The question really boils down to, “Is there any bullish news out there?”

December corn had a bad week. There’s really no way to sugar-coat it. With a drop of over 20 cents, the wind was taken out of the sails of corn bulls hoping for a weather-market run. While November beans lost a similar amount of ground, relative to corn, the losses paled in comparison. Regardless, neither corn nor soybean producers went home for the weekend feeling good about the price action we saw.

Exports

USDA offered a mixed but mostly bullish batch of export inspection data in its latest weekly report, out Monday morning. The report, which covers the week ending June 18, showed better-than-expected inspection totals for both corn and wheat, with soybeans turning in a disappointing tally that dropped below the range of trade estimates.

USDA’s latest grain export report, covering the week ending June 18, held mostly positive data, with corn, soybean and wheat exports all up week-over-week. Trad-ers mostly shrugged off that news, however, with most grain contracts down 0.5% to 1% immediately following this morning’s report.

Export sales were reported on two days this week. China brought 9.8 million bushels of soybeans and unknown destinations bought 8 million bushels of grain sorghum.

Crop progress

The latest USDA crop progress report, out Monday afternoon and covering the week through June 21, had plenty of quality data to digest, including quality ratings shifts for corn, soybeans, winter wheat and spring wheat. Analysts expected the agency to dock corn crop quality another point, but USDA increased its quality ratings instead, moving it from 71% rated in good-to-excellent condition a week ago up to 72%. Soybean crop quality also shifted last week, dropping two points to 70% rated in good-to-excellent condition. Winter wheat harvest progress has jumped ahead, to 29%.

Podcast

Favorable weather forecasts for the rest of June and early July aren’t doing prices any favors. The table is already being set for another year with yields above trend lines. If that happens this fall, the market could be bracing for record-breaking corn and soybean crops in 2020. Add it all up, and what are the prospects of a rally later this summer? Listen to the latest Midweek Markets podcast for June 24, 2020.

Recaps

Corn prices received a boost on a round of technical buying overnight after posting losses in the past four trading sessions. U.S. soybean prices dropped this morning as record high Brazilian soy exports to China caused another round of doubt about China’s commitment to the Phase 1 trade agreement. Rising coronavirus cases and increased global economic uncertainty surrounding a new wave in cases also sent ripples through the soy complex this morning. Favorable weather, increased global production forecasts, and rising economic uncertainty surrounding the latest uptick in coronavirus cases weighed on the wheat complex this morning.

Corn prices continued to erode Friday on favorable weather forecasts that suggest near-record or record production is possible this fall. The ensuing technical selling pushed prices down another 0.3% to 0.7%, with July futures dropping a penny to $3.1625 and September futures losing 2.25 cents to $3.1825. Soybean prices faded again today as traders largely ignored a large sale to China reported this morning. Wheat prices continued their downward slide Friday, with some contracts losing more than 2.5% today after harvest pressure and large global stocks spurred an-other round of technical selling.

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