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Corn, wheat markets face many factors
Closing Corn Commentary
Broker Perspective: Today’s forecast put a little more rain in for mid-next week. Corn prices did not react to a large amount which is likely due to the fact that there will be many things to talk about on Tuesday. Wheat harvest will have been going strong through the 3 day weekend in Kansas. Any large wheat moves from early yield reports will influence corn price. Light rains are expected in the Midwest this weekend which Tuesday will be able to give us the totals from. Also looking at weather, when we get back from the 3 day weekend we will have accurate forecasts on the next rain even expected for middle to late next week. Over this weekend Europe will be having meetings where the dollar can quickly react from based on what notes come from those meetings. There are plenty of reasons why corn could look to stay on the calm side today as placing too many long or short positions means holding them through many potential news stories when trade resumes. Spreaders were active again today selling the December/July spread through support at 63 and even approached next strong support just under 50. There will be many factors to keep an eye on for Tuesday. Keeping an eye on national news should cover the European situation and keeping the other on the radar should give us good insight on what to expect starting next week.
Lower Yield: Clients have asked us how quickly USDA will take a notch out of corn yields from the dryness this month. Don’t expect it to happen on the June 12 supply/demand report. Usually USDA is still making changes based on planting progress rather than current conditions. For market impact, when USDA does take a small amount off yields, in July, it will still be far more than this market needs. Our current yield estimate, of 163 bushels per acre may be lowered moderately to 159.7 in July assuming June and July weather forecasts hold. That is still a bearish yield…Rich Nelson
(5/10) Sold December corn 535, risk 550, objective 505. Closed 521 1/2.
Closing Cattle Commentary
Going into this weekend’s grilling holiday, consumers will be dealing with 5% higher beef prices. Though this is a tough one to swallow it is not as bad as last year’s 10% gain over 2010. Of course with the sharp changes in beef pricing the beef industry is reminded just how important the lower end of the product is to the industry. In the most recent data available, 85% lean ground beef at the retail level is 8% higher than last year. We hope the heat lined up for Sunday and Monday does not bring too many people indoors. For the big picture in cattle pricing the trade was reminded this week that typically cattle prices go down into summer. Our recent bump up to $123 cash cattle was good to see but it will be hard to see it again for a couple more months at least. Hedgers, hold onto to your June hedges until you sell those cattle. We may review this strategy when June futures hit our target on June at $117…Rich Nelson
(5/17) Sold Oct 120 put 2.25, risk to 4.00, objective 0. Closed 2.70.