Corn, Highlights, Markets & Rain Days Update 6/23/22

Wright Team
Jun 23, 2022
4 min read

Highlights

To us, the weather forecast for the next 14 days indicates beans and, especially corn, should have a dominating rally to test last week’s highs. However, July options expire Friday, which is always a negative factor for futures prices and, admittedly, the weather forecast 10 days out is cooler with a somewhat better chance of light rains. However, there are many days of hot and mostly dry weather in to the first week of July. There will be short covering before this weekend for corn and beans. Take it to the bank. Wheat, on the other hand, ideal harvest weather, bearish news from the yields and from Black Sea... Prehedging pressure on Friday could easily drive July and September wheat down another 50 cents.

On June 30th, the USDA will issue its planted acreage report. It is the most important USDA report of the year because, once the crop is planted, acreages do not change. Weather and yields change, but acres planted to the various crops do not change. If one expects bullish acreage news and it is the opposite, only weather can rally prices after a bearish acreage number.

The 4th of July is a Monday this year. Three day 4th of July weekends are famous for dramatic moves when the market re-opens after the holiday.

The corn crop is made or lost in July. Soil and crop conditions on the 5th of July and the 8 to 14 day weather forecast will pretty much tell the market what kind of yields we will have on corn.

Corn can easily be limit-up or limit-down on July 5th. Many a farmer has developed life-long Post Traumatic Stress Syndrome trying to decide to sell or not to sell corn before the 4th of July weekend.

Here is what you do to have a (market) stress free 4th of July weekend:

Prepare for the limit-up and the limit-down possibilities on July 5th by pricing your corn with a HTA or buy a put on all or most of your expected corn production no later than the day before the potential market shocker. Also, place an order to buy the same number of bushels of corn puts at a strike price and at a price per bushel that will only be filled if the futures price jumps 30 to 35 cents higher on the 5th of July.

If the news is bearish, you already got your corn sold and/or you have puts bought. If the news is super bullish, you will get the higher strike price put bought which will enable you to make the money on the way down you did not make on the way up.

There have been six Corn Belt droughts since 1900. The high for corn was made during the growing season in all six droughts. The 2012 drought was the latest of those six droughts and the high for corn in 2012 was made August 10th. It is noteworthy, December 2012 corn settled 40 cents below the high that day and 14 months later, December 2013 corn futures price was $4.30 cents lower. Do not think for a minute corn prices will not decline if we have a Corn Belt wide drought this year.

To repeat:

Sell corn on a HTA or buy puts to cover all or most bushels
Place an open order to buy a put at a strike price and cost per bushel that would only be filled if the corn futures price jumps 30+ cents higher.

Find out now if your merchandiser will buy the puts for you and attach them to your corn delivery contract. If not, find a merchandiser who will buy the puts or scrounge-up the money to buy the puts in your own options trading account.

Get things arranged now to be able to get those put orders placed so a bullish or bearish shocker will make very little difference to your cash flow for 2022. Read how to use put options(simplified version) here: https://www.wrightonthemarket.com/post/how-to-use-put-options-simplified-version

In other news, Agroconsult raised their estimate of Brazil’s soybean crop 2.3 million mt to 126.9 million mt, yield was left unchanged, but more harvested acres.

Brazilian soybean crush margin has turned negative 22 cents/bushel.

Yesterday seven or nine missiles hit the Viterra grain terminal at Ukraine’s Mykolaiv Everi. The terminal has been on fire since the attack as the 70,000 mts sunflower oil stored there is apparently burning. Two other big grain terminals at the port city, Green-Tour/Bunge and EVT, were also hit by missiles. The attack is what caused wheat to jump 30 cents higher yesterday before settling nearly unchanged as the sun oil news was printed.

Argentine truckers blocked highways yesterday and today, protesting high-priced and shortages of diesel.

Bill Gates acquired six parcels of land in Pembina County, North Dakota. On Tuesday, the ND Attorney General sent a letter asking Gates’ trust to confirm how the company plans to use the land and if it meets any of the exceptions to the North Dakota Corporate Farming Laws.

Market Data

This morning:

Crude oil is at $104.04, down $2.15

The dollar index is at 104.65, up 0.45

July palm oil is at 4,890 MYR, up 220. The contract high was made April, 29th at 7,229 MYR. Palm oil owns 36% and soybean oil owns 28% world market share.

December cotton is at $104.70, down $3.37 per cw. The contract high was made May, 17th at $133.79 per cwt. Cotton competes with soybeans and corn for acres.

July natural gas is at $6.743, down 0.115. The contract high was made June, 8th at $9.664. Natural gas is the primary cost to manufacture nitrogen fertilizer.

July ULSD is at $4.3440 per gallon, down 0.0606. The contract high was made June, 17th at $4.6444. ULSD stands for Ultra Low Sulfur Diesel.

Rain Days Update

The Western Corn Belt has 8 more rain days in the 10 day forecast than yesterday and the Eastern Corn Belt has 8 more rain daysthan yesterday.

The 6 to 10 day forecast updated every day at: https://www.cpc.ncep.noaa.gov/products/predictions/610day/