CBOT Jun27
Lastchanges
SMN384+8.4
SMQ385+8.4
SMU383.4+8
SMV381.6+8.2
SMZ381.5+8.1
SMF7378.1+7.4
SMH7361.6+5.1
SN1133+30
SQ1129.75+28.25
SU1114+27.75
SX1104.75+26.25
SF71101.5+25
SH71064.75+16.75
BON31.26+0.27
BOQ31.40+0.27
BOU31.53+0.26
CN385.25+0.75
CU389.25+0.25
CZ394.25+0
WN446.75-8
WU458.25-6.75
WZ478.00-6.75
Let the divorce begin as Britain's exit from the European Union ripples throughout the markets. The divorce could be long and expensive, and the unknowns are sending bank stocks lower along with most global markets this morning, the exception being Asian markets. Willthe US follow Asia's lead to start lower and end higher? Hope so. IN the meantime, the Dow will begin its day with around a 200 pt loss.
Macro developments, stable ratings and sporadic Midwest rainfall hit the grain and soy markets hard last week, sending all out of their spring uptrends into trend changing lows. This morning the markets are higher as the downturn seemed to have sparked good commercial pricing interest. Prices this morning begin higher across the board. Before last week, the market had yet to find its highs. Higher markets this AM suggest that current lows may be it as we head into end of the month.
The US dollar is firmer against a weaker Euro, with the British pound taking a further beating. Crude oil lows are $46.61/barrel against the safe haven commodity gold. This week looks to offer more volatility with the all important June 30 stocks/acreage report ahead which is also end-of-month. And despite the down-move in most of the markets, the fund futures/options position is still fairly steady (not as much fund liquidation as expected last week) with wheat the only short. Here is the break-down in estimated contracts:
wheat: short 69,200
corn: long 191,800
beans: long 185,000
soyoil: long 35,800
meal: long 52,800
The markets opened as called with the soy complex keeping gains intact. But wheat futures traded lower on the day weighing on corn. Today seemed to reflect the upcoming numbers on June 30 with a buy beans/sell corn and wheat psychology intact.
At 10:00 export inspections were released as follows:
soybeans: 272,066 tons vs. 314,382 wk ago
wheat: 511,701 tons vs. 571,724 wk ago
corn: 1,451,227 tons vs. 1,235,070 wk ago
Inspections were in line and better for wheat
The markets opened higher with soyoil futures gaining on meal prices. The nearby bean spreads inverted further with July /Nov beans trading up to 29 1/4 as more business announcements under-scored the bull spreading activity. August / Nov traded up to 27 1/4c highs. Canola prices followed soybeans higher, and higher rapeseed prices in Europe. Oilshare rose as soyoil futures rose vs. meal. Dec crush values continued steady at 85c/bu.
Wheat prices broke lower as a stronger US dollar would make this commodity uncompetitive on the global marketplace. Corn prices tried to strengthen following beans, but finally traded both sides of even as wheat values continued to break further. The Sep wheat/corn spread traded down to 69c early in the session, and then down to 66 1/2c. Sep /Dec wheat spreads widened out to 19 3/4c, while Sep/Dec corn carries narrowed into 4c from 5c. Later in the session Kansas City wheat led the market declines with CBOT following, which continued to weigh on corn prices. Corn did find good pricing as prices broke into lows under wheat's pressure.
CLOSING COMMENTS
Days when macros are at play reveal the true nature of each market. IF one thought that the bean market rally is over - think again, as price action divorced itself from all the other negatives on the board. The weakest market, wheat, cannot hold a rally of any sort. Days and events like this should be "read between the lines" day. IF beans were going to weaken further, they should have done it. Continue to price on good breaks.
Crop progress numbers will be released tonight. This will be interesting, as they are probably the first ratings to appear after the significant heat spell. Cooler temperatures this week could be countered by ratings should corn and beans decline more than expected leading to a turn-around Tuesday trade, and perhaps more trading range price action for beans, meal, and soyoil.
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