by Duane Lowry
Tuesday, June 21, 2016
Corn settled 25 cents lower, which was the lowest daily settlement since May 31. Today’s settlement price is 40 cents off Friday’s settlement. Weather has been generally favorable throughout the planting and early crop development period for most areas. Old-crop supplies are plentiful and new-crop carryout projections are expected to increase over the current year if normal/favorable conditions exist throughout the growing season in most areas. Apparently, all this background data gained traction today. Recent price peaks are similar to the price peaks attained last year. Who knows what the weather holds in store for the balance of the growing season, but after today’s price action there may need to be some substantive fundamental driver to revisit the price zone where we spent the last several days churning. Producers have had ample merit for an aggressive price stance and producers need to continue to focus on downside risks.
Soybeans retreated towards last week’s lows, producing the lowest settlement since June 6, settling down 22 cents. Prices had rallied $3 from the March lows and today’s values are about 75 cents off the peak established June 13. Price volatility can continue. Charts appear threatening. Producers need to focus on profit opportunities offered and downside risks.
Wheat collapsed as well, settling down 15 cents. The fundamental backdrop here has been and remains bearish.
In summary, today’s price weakness is not that difficult to explain/justify when we consider the generally favorable weather the US 2016 crops have experienced to-date in most areas, but it is perhaps more difficult to understand what makes today so special. For in reality, it seems more difficult to explain why prices attained recent peaks, rather than to find merit in today’s weakness. We have a lot of growing season ahead and a lot of potential for price volatility in either direction. Today’s price action doesn’t remove potential to revisit recent price peaks or to even make new highs. But, today’s price action should cause producers/traders to view the significance of recent price advances and to again reassess downside risk and the merit in finding price levels that work for individual operations and a way of protecting profit opportunities. It wasn’t that many weeks/months ago that most didn’t believe it was possible to achieve current price levels. At 1:15: Crude= down $0.22, Gold= down $19.10, Dow Index= up 35 and the US Dollar= up 33, Dec Corn down 25 cents, Nov Soybeans 22 lower and Sep Wheat down 15 cents.
WEATHER: Midday weather forecasts were largely unchanged from this morning’s discussion. Conditions and forecasts remain favorable/non-threatening for most areas.
Tuesday night's grain trade outlook: Trade on both sides is possible, but there will be fears that today’s weakness generates more selling pressures.
Humor/Quote of the Day:
There is no end to the things you don’t understand. The mind will search for a lie to give it an answer you can understand.
-- Shannon L. Adler.
Public Relations is at best promotion or manipulation, at worst evasion and outright deception. What it is never about is a free flow of information.
-- Heather Brooke.
This newsletter is prepared from information believed to be reliable. Early Market News, Inc. does not guarantee that such information is accurate or complete and it should not be relied upon as such. Opinions expressed are subject to change without notice.