Switching to July contracts, corn gained 11’4 to close the week at 596’4. Futures managed to fall all the way to 569’2 on Wednesday, the lowest level since January of 2022, before recovering to near 600 on Friday. July beans gained 17’2 to close at 1436’4, a recovery of over 50 cents from a Wednesday 1392’2 low. Even wilder week for July spring wheat, with futures hitting 769’0 on Wednesday before rallying to 836’0 by Friday’s close. Over the past three weeks, wheat has featured a drop of 126 cents, followed by a rally of 57 cents.
Markets were under pressure again at the start of the week, with both corn and wheat struggling into new multi-year lows. In addition to lingering export/demand worries, the failure of First Republic Bank, another interest rate hike, crude oil falling, and broad recessionary fears kept managed money aggressively selling grains. Exports sales were rough again with corn posting negative 12 million bushels after a slug of recent cancellations; almost certainly will see old crop carryouts increased in this week’s WASDE report.
The fundamental narrative shifted though on Wednesday as some of the stuff we’ve been talking about started to take hold. A private wheat tour in OK estimated only a 24-bushel yield, the worst crop there since 1955 and much worse than trade was expecting. A similar tour in KS found similar results, and neither of these private forecasts factored in abandoned acres.
There was a bonkers story about a supposed drone strike attempt by UKR on the Kremlin; how do a couple of drones make it all the way to the Kremlin…? Again, bonkers, but served to underscore the high probability of the UKR export corridor deal going away in a couple weeks. Forecasts also turned wetter mid-week while equities/outside markets surged on Friday.
So what happens now? Grains have already mounted a furious rally since our all-commodity Strong Buy last Friday, but the setup looks good for it to continue in the short term. Current forecasts are going to keep corn planting overall a little behind pace, while the NW Corn Belt will no more than get started. It will likely be shut down again after this weekend’s rain.
The May WASDE report should confirm much worse hard red winter wheat yields. Perhaps, most importantly, Managed Money is back to their shortest net position since August 2020. Certainly an awkward time for that, given both a major drought and planting delay worries. Miserable exports/demand problems and looming recession fears likely temper the extent of a rally though, with 2013 still serving as an excellent seasonal comparison of what to expect.