Fundamental Shift

Greg Mockenhaupt ProEdge Risk Management Consultant 

Greg Mockenhaupt
ProEdge Risk Management Consultant

It feels like there is so much to talk about with the 180-degree shift in fundamentals on June 30th after the release the USDA stocks report. Prior to the report, the primary focus of the market was managed money. It seemed the U.S. Dollar and oil had a major influence on grain, and the funds net short position controlled the market. Then the report was released causing a major reaction to the upside. Before the dust settled, the anticipation of yet another report caused new buyers to enter the market giving us a nice rally starting Thursday last week. The trade felt the July 10th USDA Supply and Demand report would provide a reduction in yield expectations. However, the USDA left yields unchanged. This would be seen as negative, but the buyers still came, posting new highs in December corn reaching the contract high of $4.49 and November Soybeans reaching $10.36. It seems buyers want to buy, despite the somewhat negative news. This is quite a shift from just a few weeks ago when there was record selling. Looking forward, many traders are still confident we will see a yield estimate reduction in the USDA August report.

To summarize Friday’s report charts provided below:

GRAIN CHART

*Yield was left unchanged, but will be updated in the August S&D report

**Acres were pulled from the June 30th Planted Acreage report

It always feels better when we are in a bull market……when buyers keep grain supported. We still see some weather concerns as well, which continue to add premium to grain prices. Hopefully, this will continue to push the bullish excitement and provide more selling opportunities moving forward.

Strategy: With the strength in the market, and question of what is yet to be seen as far as market potential, it may be wise for producers to look at using some sort of floor strategy to protect the bottom, yet participate in upside potential.