Phyllis Nystrom

The following market analysis is for the week ending June 22.

SOYBEANS — A change in the weather forecast to one that included more moisture for the eastern Corn Belt precipitated a 50-cent plummet in prices for this week.

This retraced all of the gains made this month and drove home how sensitive the markets are to any change in weather maps. The weather impact on beans at this juncture is less than on corn since August weather will better determine bean yields. Funds were liquidating length as the charts turned negative which fed the decline.

Argentina’s agricultural secretary increased their soybean crop estimate 2 million metric tons to 47.2 mmt this week versus the last U.S. Department of Agriculture number of 46.5 mmt. Brazil’s real has weakened lately, down to 1.928 per U.S. dollar.

Export sales were decent for the week at 13.2 million bushels when we only need 2.8 million per week to attain the USDA projection. Mexico was the featured buyer. New crop sales at 1.2 million bushels bring new crop sales to 144.8 million versus 111.7 million last year at this time.

OUTLOOK: Besides the weather, there just wasn’t that much in the market this week. We could prattle on about side events, but they pale in comparison to what a change in a weather front can cause.

I would peg the next support in the November soybeans at $8.21, then $7.75. November beans tested $8.25 this week and were down an even 50 cents while July beans fell 50.25 cents. On the flip side, if the weather turns hot and dry, we’ll challenge the $9 area again.

CORN — Since corn is actually more sensitive to weather changes at this time of year than beans, corn plummeted the 20-cent limit twice this week when rain hit the ground in the eastern Corn Belt. This erased the previous week’s entire rally.

December corn lost over 12 percent of its value, down 51.5 cents on the week. July corn dropped 42.75 cents, or 10 percent.

To say that Mother Nature, or our interpretation of her, has the market in its grip would be an understatement. Usually at this time of year most of us hope to get lucky, since you can’t be confident about outsmarting the weather.

The U.S. drought monitor, released every Thursday, showed expanding abnormally dry areas in Illinois, Indiana, Ohio, Wisconsin and Minnesota.

Funds were huge sellers when technicals began sprouting sell signals. As I mentioned before, in this type of market you need to focus on the bushels that are still at risk in your marketing plan and not second-guess yourself on bushels that have been priced.

Hot temperatures and dry conditions continue to plague Europe and Russia. This has lent support to the wheat markets, in addition to what’s beginning to look like a disappointing Plains wheat crop, which in turn had helped to support the corn market. The improving conditions in the Corn Belt outweighed these factors this week.

Export sales for the week were at 32.3 million bushels, but still below what we need on a weekly basis to meet the USDA projection. Japan and Taiwan were the main buyers. New crop sales added another 6.3 million to the books, bringing sales to 138.3 million bushels versus only 42.4 million last year.

The Senate passed the Renewable Fuels, Consumer Protection and Energy Efficiency Act of 2007 which increases the renewable fuels standard to 36 billion gallons by 2022, a feasibility study of an ethanol pipeline and standards to increase automobile fuel efficiency to 35 miles per gallon by 2020, among other items. The bill must now be passed by the House of Representatives.

OUTLOOK: It’s like trying to catch the wind. The gap in the December contract at $3.96 1/2 was filled this week, with the low for the week at $3.79. The next short-term support level for December corn is at $3.65 1/2, then $3.54 1/2. If a ridge develops that kicks us back into unfavorable growing conditions, the $4.25 area will again become a target.

Fasten your seatbelts, ladies and gentlemen; it’s going to be a bumpy ride. The USDA will update planted acres and grain stocks on June 29.

Trending Video