CbOT 27 May 2016

CBOT May 27
Lastchanges
SMN402.6-7
SMQ388.7-4.4
SMU381.1-0.3
SMV375.9+1
SMZ374.2+1.3
SMF7366.9+1.5
SMH7351.6+0.8
SN1086.5+6.75
SQ1083+5.75
SU1067.5+5.75
SX1056.25+5.75
SF71054+7
SH71030.5+4.75
BON31.48+0.44
BOQ31.61+0.45
BOU31.74+0.44
CN412.75+4.5
CU414.25+3.75
CZ413.50+3.75
WN481.50+0.25
WU491.75+0
WZ508.25-0.25

GOOD MORNING,
The weather continues wet but mild in the St. Louis area.  Good news for farmers when it stops raining.  The lawns are looking fantastic everywhere.  But the funds are still sticking to their long positions in corn and beans, fueled by business announcements and soaring crush values.  The set-up for today finds us fairly close to yesterday's settlements, but no doubt as its Friday we begin the process of evening up our positions.  The futures/ options combined appears as such estimated in contracts:

beans:  long 195,000
meal:    long 99,000
soyoil:  long 46,000
corn:  long 82,000
wheat:  short 75,500

Interesting statistics above include the fact that meal is the closest to its all-time record length of 101,618 contracts.  The soyoil position has remained steady over the last few weeks, while corn length has been extended.  Beans are about 50,000 or so away from their all-time length in this category.

We will trade positions today with funds making the appropriate adjustments which includes nearby spreads.  They are weaker this morning with soyoil futures stronger against meal.  Other adjustments could include a bit of sell corn /buy bean trade. 

The Dow is called higher and is coming once again quite close to the 18,000 level.  The US dollar is firmer and crude oil, which traded over $50/barrel, is back-pedaling.

On the calendar - fund rolls begin this week and continue into the first few weeks of June.  July contracts will be moved to deferred contracts, and you can check your appropriate fund to see whether they are spread to the closest contract or farther back.

Prices started the day as called with noted new highs in corn, and more profit-taking in recent spread trade. 

SOY
The soy complex prices were mixed with profit-taking in the meal market, particularly for the July contract.  Beans followed a stronger soyoil futures market creating a floor under the monthly lows for oilshare which climbed back to 28%.  Crush values fell on meal's correction with July at 1.49c/bu and August at 1.24c/bu.  Canola prices were much lower today as better rains are expected to emerge for the crop.  July beans were operating mostly in the green today with November values up 3c as spreads corrected.  Nov beans highs for the move were 10.79 1/2 with prices stabilizing today from $10.55.   Nearby spreads were a touch weaker with July /Nov trading between 25 1/2 up to 30c inverse.  July /Dec meal inverses were between a 37.10 high and a 27.20 low, down 8.50 or so for the day.    Beans remain supported with Argentine harvest behind and yields continuing to show deterioration with high moisture levels.  Meal setbacks are continuing to see support from uncovered users and buyers who remain mostly spot given today's higher prices.

GRAINS
The major feature in grains was the continuing strength of the July corn contract, which set a new high for the move upward at $4.12 today.  The U.S. continues to gain more international share, with Brazil's corn crop still under stress and reported production amounts forecast lower on a weekly basis.  July  / Sep corn carries strengthened, trading into a 1/4- 1 3/4c carry.  By contrast wheat prices were lower but also traded higher briefly in somewhat low turnover. There is talk emerging now about too wet conditions for winter wheat, and some continuing talk of stripe rust and other disease issues emerging for crops.  But today's price action for wheat was mostly technical, with prices continuing to be mostly on the defensive with good global supply weighing down rallies.  The July wheat/corn spread moved to 74 1/2 with a 69 1/4c low.

OUTSIDE MARKETS
The Dow opened 8 pts higher and rallied to 34 pts in light turnover.  The US dollar was a touch firmer with crude oil still attempting to test the $50/barrel benchmark again..

CLOSING COMMENTS
Good technical price action in beans continues with corn prices catching up.  Wheat prices just continue to react to the other markets, making it ripe for selling.  Soyoil prices are correcting upward against meal.  But when we return, the focus is going to switch to acreage in a big way - and which crop has gotten planted in a timely manner.  We may be gaining big bean acres, but we won't know that for awhile.  And that will keep the funds engaged on the long side (except for wheat) until we get more clarification about demand and crop progress.