Free Commentary

With government reports behind us, at least for a brief moment, the markets’ attention has returned to weather and right now is a bit disconcerted with what it sees.  For much of the corn/bean growing regions, we are promised hot temperatures with sporadic rainfall and the potential for a high-pressure ridge to settle in next week.   Weather markets are notoriously challenging to navigate as they can be as fickle as…the weather.  Regardless, when you have a situation as we have particularly in the corn, where there appears to be little to no growing risk premium and until last week, a record short position held by large specs, once the ball begins to roll, sometimes it is difficult to stop.  It will be interesting to see the Commitments of Traders report released to see how much they have lightened up.

Weather concerns are not limited to the United States either, as China has been experiencing some record-setting anomalies, but in their case, with too much moisture.  The city of Wuhan, who, as we know, has been in the news during the past year far more than any of us care to hear about, is on flood alert as rains have inundated the region.  Over the weekend, there were reports of anywhere from 7 to over 37 inches of rain in the Hubei and Hunan regions.  In the southeastern state of Anhui, there has now been over 84 inches recorded since the 1st of June.  Coarse grain and oil production in the east-central and northeastern parts of the country have not been impacted as severely but crops in the Yangtze River Basin have.

As long as we are on the topic of China, they have now suspended pork imports from two more processing plants in Brazil.  Testing at several different JBS and BRF plants in Brazil has revealed COVID-19 infection rates as high as 20 to 30%.

China remains an active buyer for U.S. soy and corn, though.  This morning the USDA announced sales to that nation of 264,000 MT of beans for the current crop year and 204,000 MT of corn for the 2020/21 crop year.  In addition to this, there were sales of 182,880 MT of corn to Mexico reported.  Of this, 121,920 MT was for the 2020/21 crop year and 60,960 for 2021/22.

It is worth pointing out as well that the U.S. Dollar has begun this week under pressure, which could also be helping to support the psychology of the grain/soy market this morning.  While we have yet to violate any significant price triggers, technical indicators would appear to suggest there us more pressure to come.