The week of the “Peek-a-boo ridge”. Depending on the day, forecasts waivered back and forth between notable heat and more moderate temps in the extended forecasts. This provided ample fodder for the headline traders in the grain space. While it is less likely that corn will suffer due to extreme temps at this stage of the game, soybeans are just entering their more critical production time frame. This gave the beans more reason to price weather risk back into prices while corn was stuck in a fairly narrow range for the week.
World demand for grain from the US appears to be steady rather than showing a sharp drop in favor of our South American counterparts. The slow pace of harvest in key South American regions is helping our cause. Furthermore, the US dollar index has been trading lower recently making US grain more competitive in the world.
In light of the recent market drop, cash grain sales have slowed dramatically. From a local basis perspective, this has been supportive to values. The prevailing opinion in mid-June was there was ample grain in the country that has yet to move to market. The price drop may have slowed the movement down but at some point the grain will need to move meaning basis strength is likely to be short-lived. On the futures side, mother nature is driving the bus. If weather is perceived to be damaging to overall crop production, particularly in beans, we are likely to see a boost. Should this is the case, corn could be a reluctant follower to the upside.
Given the variability of price movement, now is the time to have pricing orders in place with the grain department to avoid missing an opportunity.
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CHS – Rochester Grain Team
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