CBOT closing 17Jun 2016

CBOT Jun17
Lastchanges
SMN407.4+9.7
SMQ406.7+10.6
SMU406.1+10.9
SMV405+10.7
SMZ405.3+10.7
SMF7401.2+10.9
SMH7381.5+10.6
SN1159.5+25
SQ1160+26.5
SU1151.75+28
SX1148.25+29
SF71146+29
SH71107.5+23.75
BON31.93+0.77
BOQ32.06+0.76
BOU32.19+0.75
CN437.75+12.5
CU442.75+12.25
CZ448.75+13
WN481.25+8.75
WU494.75+10
WZ513.00+8.75

GOOD MORNING,
Prices are higher this morning as the heat is here but the rainfall amounts remain questionable for next week.  Corn crops not in irrigated fields at this point may be challenged.  Consumers took the break last night as an opportunity to get something priced, and shorts in the market were electing to cover something this morning with the potential for prices to still bounce back.  While we define our trading ranges off the highs, we have yet to confirm a top in corn, beans, or meal.  Moral of story is that when prices drop, take advantage until we get more weather and acreage numbers via the June 30 report. 

Heading out the door tonight, the potential positions for the funds futures / options category looks something like this:

beans:  net long 210,000 (now back under record length)
meal:     net long 62,700  (pared back from the overall highs closer to 80,000)
soyoil;   net long 35,000  (vs. the core 45,000 over the last few weeks)
corn:      net long 213,000   (longer than in the last several weeks)
wheat:   net short 85,300    (slightly shorter)

As noted above, the tendency of the last week has been to pare back length in front of the June 30 reports and put more of a short hedge back in the wheat market as protection.  The sideways to lower trade in soyoil futures is creating more of an almost even feel to this market, particularly as compared to solid length in meal.

The markets opened at the strongest end of expectations and traded higher than expected at the open.  More chatter about lack of rainfall for next week is filtering across the marketplace.  Consumers continue to price on market breaks, recent bears are covering their shorts into the end of week.

SOY
Soybeans, meal and soyoil put in a strong opening day of trade which triggered small buy-stops and took prices into key first resistance levels.   July contracts continue to liquidate.  July bean open interest dropped by 13,337 with November picking up 5,060 contracts of open interest.   November bean open interest is the highest at 400,112 contracts with July meal open interest is down to 69,022.  July soyoil open interest stands at 87,178 contracts.   Crushers remain active though margins are quickly beginning to weaken, with Dec at 1.00c/bu but July back to 88c/bu.  Bean inverses remain well supported as they break with July /Nov and August / Nov trading down to 10c/bu.  Bean demand is still good, with diverse buyers in the market besides China.

GRAINS
Grains were higher led by corn.  Wheat futures tried to rally but key resistance levels held as prices firmed.  Wheat continues to be a follower of corn direction.  HRW harvest will be big this weekend, while SRW is expanding as well into the north.  Therefore corn seems more open to rallying over wheat for now until the crop pressure from harvest is alleviated.  That may occur after this weekend.   Corn prices firmed towards previous highs as traders remained concerned about hot temperatures and a lack of good rainfall over the next week.   Front month liquidation is still a good portion of the daily trading range volume.   July corn interest dropped by 22,519 contracts as traders continue to roll or liquidate length in front of first notice day.  September corn open interest now holds the most contacts at 516,534 followed by Dec corn at 459,503.  Corn exports still remain active, which brings support to the market when breaks occur such as saw this week.

Fund recap
bot 6000 corn
bot 6000 beans
bot 2000 meal
bot 2000 soyoil

OUTSIDE MARKETS
The Dow is down 20 pts with a slightly weaker US dollar.  Crude oil is very steady bouncing off a $45.83/barrel low.

CLOSING COMMENTS
Trading range activity with all eyes focused on weather, crop progress next week, and the June 30 report after that.  The markets continue to chop around in large ranges.  One thing to remember is that with South American supply down we cannot afford a big weather problem.  Charts still suggest that new highs could be out there if the weather is hot and dry - so take advantage of any hint of a weather change that promotes a good break as we saw this week.  If conditions begin to decline, we could quickly take out our highs.