Closing 23 May 2016

CBOT May 23
Lastchanges
SMN387.7-5
SMQ377.5-3.3
SMU371.5-2.2
SMV366.3-2.2
SMZ364.6-2
SMF7360.3-2.2
SMH7347.7-3
SN1058.5-15.75
SQ1057.75-15.75
SU1045.5-14.75
SX1036.25-13.25
SF71033.5-14
SH71016.25-11.25
BON31.15-0.12
BOQ31.26-0.12
BOU31.38-0.12
CN397.75+3.25
CU399.75+3
CZ402.75+3
WN462.00-5.75
WU473.00-5.75
WZ491.00-5.5

GOOD MORNING,
Beautiful weekend in St. Louis with warmer and drier weather.  Forecasts remain warm and farmers will be looking for opportunities to get the rest of the corn in the ground along with their beans.  Prices this morning are reflective of better planting opportunities, with a more relaxed theme as the temps across the Midwest goes from levels in the 50's up to 70/80's.   The advertised corn pace is expected to be around 80/85% for corn vs. a five year average at 86%.  Beans are expected to jump up to 55-62%.  

In terms of other reports, the USDA Cattle on Feed released on Friday indicated May 1 on-feed at 101% of last year above trade expectations of 99-100%.  Placements were 107% of last year versus expectations of 99%.  Marketings were light relative to trade ideas at 101% of year ago vs. 102 expected.

If we examine the overall bearish and bullish inputs we break it down this way: 
Bull side for corn:  becoming more competitive with less competition from the Black Sea.  The Brazilian corn crop is cut weekly as the drought is persistent with no relief in sight.  Funds are long and they probably plan to stick around into key pollination around July 4th before adjusting in a major way.   

Bear side: globally we still have loads of corn, and ending stocks in the U.S. that are still very ample.

Toss up:  where is the last 15% of corn going - corn or beans?  The market is likely going to acknowledge beans if progress over the next few weeks starts to get behind.

Bull side for beans:  weather turns better and last 15% goes to corn
Exports still good.  Crush still at seasonal new highs for the move upward.
Bear side:  carry-out still ample from 350-400, and even the 2016/17 at 305 mln bu not tight.

Bull side for wheat:  only place funds hold a considerable short position
Bear side:  global conditions good in the U.S., plenty of Black Sea stuff, growing US ending stocks.

SOY
Opening soymeal strength in the July contract was the feature at the start of the day.  July meal set a new contract high in the opening moments at 398.30 against a weaker soyoil trade.  July oilshare initially fell to .2823% on meal's strength which pushed July crush values up to new highs.  But after the initial open July meal futures found profit-taking at new contract highs which were close to $400.00.  Prices seesawed on either side of settlement for meal, triggering small sell stops as prices worked lower.  Weaker meal created more profit-taking in the bean market.  July soyoil futures found support at nighttime lows of 3079, pushing oilshare back to .2880% in July with crush values at 1.35/bu, still high for this time of the year.  July /Dec meal inverses relaxed from a 30.00 high to trade to a low of 22.20 by midday, not that much weakness considering the extent of the rally.  July /Nov beans traded down to 23c from highs closer to 39 1/2 on Friday.

GRAINS
Buy corn/sell wheat trade was the key feature of the day.  July corn broke to key support and found support technically and a bit fundamentally with export inspections coming in fairly good.  Spreads narrowed with July /Dec corn carries trading to 4c from a 5 3/4c high.  July wheat was largely ignored as traders are not willing to add to bearish positions in front of a holiday.  Buy July corn/sell wheat traded at 66c. 

The futures / options combined estimated positions in contracts look like this:
beans: net long 205,100
meal;  net long 88,700
soyoil:  net long 52,900
corn:  net long 53,970
wheat:  net short 83,575

CLOSING COMMENTS
On Monday's we often trade fund positions, which are very long beans and meal.  Thus the profit-taking evident today. 

The meal market's dynamic advance was met by a very erratic trade, making it feel as though a temporary top is in place.  The market is still going to attract support on setbacks in beans/meal from buyers who have to price or missed their chance via the last rally.  Since this is heading into a holiday weekend, the theme we saw today of light liquidation may stick around all week as we drive into trading ranges from the "tops".  Or in wheat, from the bottom.