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Farm markets start June with a double-digit rally | Tuesday, June 1, 2021

Dry weather outlook is price supportive.

To start the month of June, the CME Group’s farm markets closed sharply higher.

At the close, the July corn futures finished 32¢ higher at $6.88¾. New-crop September futures finished 28¾¢ higher at $6.02. December corn futures closed 31½¢ higher at $5.77. 
 
July soybean futures finished 18¢ higher at $15.48½. August soybean futures closed 18¾¢ higher at $15.00. New-crop November soybean futures ended 24¼¢ higher at $13.97.

July wheat futures closed 30¢ higher at $6.93½. 

July soymeal futures settled $3.20 per short ton higher at $398.70.

July soy oil futures closed $1.60 higher at 67.39¢ per pound.

In the outside markets, the NYMEX crude oil market is +1.35 higher (+2.04%) at $67.67. The U.S. dollar is lower, and the Dow Jones Industrials are 74 points higher (+0.22%) at 34,603 points.

Britt O’Connell, ever.ag, says that the markets are building in frost premium. 

“Markets are spinning higher today as the market tries to gain a better understanding of how much damage was caused to the crop over the weekend due to frost. Anecdotally, we have heard of areas hurt in northeast Iowa, north-central Michigan, central Minnesota, and North Dakota. In stark contrast to this past weekend’s weather, the extended forecast has a hot and dry weather pattern moving into much of the Corn Belt. While the heat will be welcomed, many areas are walking a fine line between just enough and not enough rain. Volatility will remain high as long as ending stocks remain tight,” O’Connell says.  

David Tolleris, WxRisk.com, says that the Corn Belt’s growing weather could remain dry for an extended period.

“The overall pattern looks really dry for most of the central and Upper Plains and a good portion of the Midwest for the next two weeks. The drier pattern is also somewhat warmer, which will help reduce the deficit that currently has developed in many portions of the Plains, Midwest, and the Delta regions with respect to GDD. Essentially what is going to happen is the western Atlantic Ridge – which is often referred to as the Bermuda High – is going to build into the eastern third of the CONUS. The effect will be to shut off the precipitation for the East Coast and a good portion of the Midwest and upper Plains but increase the rainfall chances over the lower Plains and the Gulf Coast,” Tolleris says. 

Tolleris added, “A major trough centered in the Midwest will move steadily eastward in the next five days. At the surface, a cold front will not have a lot of rain as it passes through the western Corn Belt (WCB), but there will be some minor rain in the eastern portions of the ECB. The front will slow down across the East Coast & Gulf Coast states with increased rain chances in those areas. Temps will continue to run below normal south of I-70 and much below normal in the lower Plains. There will be some warming across the upper Plains into the Great Lakes region.”

Al Kluis, Kluis Advisors, says that the USDA Crop Progress report today may show U.S. corn crop rated at about 72% good to excellent. The main area of concern is in the Northern Plains where many areas missed the rain or have had only 0.5 inch of rain in the last four weeks.   

“The overall U.S. corn and soybean crops look good with limited problem areas. The huge old-crop cash market premium continues to erode,” Kluis stated in a note to customers. 

Kluis added, “I am watching the price of corn and soybeans in China. Last week, Chinese financial regulators ramped up trading limits to reduce speculation in the stock and commodity markets. This triggered a hard down-move that bombed prices. However, grain prices are bouncing back in the first two days of trading this week.”

On Friday, the CFTC Report showed that money managers sold 23,000 CBOT corn futures and options in the week ended May 25. This lowered their net long position to 268,000 contracts, 39% lower than their three-week total. For soybeans, speculators remain net-long by 133,657 contracts, down from 144,594 contracts a week earlier.

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