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Nerves Spark Soybean Rally

06/26/2014 @ 3:22pm

Nerves probably got the best of the market today. After trying to be so calm in the face of tight supplies, the bean market staged a sharp rally due to strong cash markets for both beans and meal. Also, this morning’s export sales report, with a reported 317,200 metric tons of old-crop sales, was larger than expectations. Each week, traders expect to see sales cancelations, but it just doesn’t happen. 

Corn tried to follow along but ended up only 2 or 3 cents. The tight supplies argument can’t really be used, leaving the market to ponder weather, crop conditions, etc.   

The market also rallied last Thursday, although it seemed to be more weather driven. Early this week, corn and wheat both sagged. Beans, however, were steady/firm, reflecting the strong cash. 

The anxiety comes just a couple of days before the June 30 acreage and stocks reports. There will be many important numbers due out for traders and analysts to consider. With many numbers, there is a high chance for a market surprise. And history shows market reaction on these quarterly report days tends to be very volatile. 

This year, there will also be a long weekend of no trading over the 4th of July holiday. For grains, trading stops at noon on Thursday the 3rd and does not resume until 8:30 a.m. on Monday the 7th (all times CDT).  Although this seems a long way off, by Monday the 7th, the market will be fixated on weather conditions and forecasts more than ever, as corn pollination should be beginning. 

The prereport guesses are:

Corn acreage                     91.7 million acres

Soybean acreage               82.2 million acres             

All wheat acreage             55.7 million acres             

Spring wheat acreage       11.9 million acres


STOCKS

Corn stocks                           3.724 billion bushels

Soybean stocks                 387 million bushels

Wheat stocks                    603 million bushels

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The risk of loss in trading commodities can be substantial.  You should therefore carefully consider whether such trading is suitable for you in light of your financial situation.


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