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Grains: Bear Rally · Professional Ag Marketing Podcast

• 0:01
  SPEAKER_01: Welcome to the Professional Egg Marketing Podcast.
• 0:04
  SPEAKER_01: If you want a deep dive into the egg markets and risk management strategies, your search is over.
• 0:10
  SPEAKER_01: Come here after every Friday to get your weekly commodity recap.
• 0:14
  SPEAKER_01: Trading commodity futures and options involves substantial risk of loss and is not suitable for all investors.
• 0:21
  SPEAKER_01: This is your host, Mike Miner.
• 0:22
  SPEAKER_01: Let's get started.
• 0:23
  SPEAKER_01: Today is July's 18th.
• 0:25
  SPEAKER_01: I've got Jordan with us today.
• 0:26
  SPEAKER_01: How's it going, Jordan?
• 0:27
  SPEAKER_00: Good.
• 0:27
  SPEAKER_00: How are you, Mike?
• 0:28
  SPEAKER_01: Pretty good.
• 0:29
  SPEAKER_01: We're going to be talking about the grain markets and whole today.
• 0:32
  SPEAKER_01: We've got actually a lot of fun stuff to talk about today on the grains.
• 0:35
  SPEAKER_01: It it took a long time here to get a somewhat green week, didn't it?
• 0:39
  SPEAKER_00: Yes, it did.
• 0:40
  SPEAKER_00: You know, we uh posted uh what four green days out of the week.
• 0:43
  SPEAKER_00: Um, you know, had a little bit of a blip of a red day yesterday, but you know, it's uh it's been a while since we had that kind of green on the corn market.
• 0:51
  SPEAKER_01: Yeah, so let's just talk through uh specifically December corn here to get started.
• 0:55
  SPEAKER_01: What did the week kind of look like, low to high, some of the talking points, Jordan?
• 1:00
  SPEAKER_00: Yeah, so uh, you know, we came in uh Sunday night and ended up uh making a new low on that uh December corn, traded all the way down to four oh seven and a half, and you know, kind of since then we've we've rallied every day except for yesterday, right, and and closed the week higher today.
• 1:16
  SPEAKER_00: Um you know, the the story in corn has been, you know, just a really, really good looking crop, right?
• 1:23
  SPEAKER_00: 181 yield is what the USDA is forecasting today.
• 1:27
  SPEAKER_00: The market and the funds, you know, really feel like uh we're seeing a bigger crop out there.
• 1:33
  SPEAKER_00: I think they're trading closer to that 185 number is what what it really feels like, which would you know put uh ending stocks up over two billion bushels.
• 1:42
  SPEAKER_01: Um, you know, especially by the time you factor in.
• 1:45
  SPEAKER_01: Brazil has a massive crop.
• 1:47
  SPEAKER_01: Maybe that takes away from our exports a little bit off of what they already have plugged in there, which is pretty high.
• 1:53
  SPEAKER_01: So maybe that does easily get to two billion, then, doesn't it?
• 1:57
  SPEAKER_00: Yes, it does.
• 1:58
  SPEAKER_00: Yep.
• 1:58
  SPEAKER_00: So, you know, overall just a really good looking crop, good to excellent scores at 74%.
• 2:03
  SPEAKER_00: Iowa continues to hit it out of the park there at 85.
• 2:06
  SPEAKER_00: So, you know, that's the reason why the funds continue to to sell it and you know made a new low there on Sunday.
• 2:13
  SPEAKER_00: That's that's a story that you know everyone's known here for a while, right?
• 2:17
  SPEAKER_00: But you know, this week, you know, we start to see a little bit of buying happening there on on uh Monday, kind of bounce off the lows, make a make a reversal there.
• 2:26
  SPEAKER_00: Um felt like the funds were kind of you know lightening up a little bit, taking some profits is what what we are kind of hearing.
• 2:33
  SPEAKER_00: And you know, as the week kind of progressed here, you know, there's a couple different things that you know kind of fed that that bull market there a little bit.
• 2:40
  SPEAKER_00: Um, you know, one being that uh there is a little bit of heat moving into uh the Midwest is what it kind of sounds like late next week.
• 2:50
  SPEAKER_00: Um, you know, you're supposed to be seeing 100 to 105 degree heat moving up from the south, kind of into that central to eastern corn belt, is what what's being talked about.
• 3:00
  SPEAKER_00: So, you know, that kind of fueled the fire there a little bit.
• 3:03
  SPEAKER_00: But with that, they're expected to kind of get one to two inches of rain.
• 3:07
  SPEAKER_00: So, you know, we kind of continue on this uh, you know, kind of wet pattern that we've had here for a while that is, you know, really making a nice, nice growing season.
• 3:17
  SPEAKER_01: Some of those too, like overnight temp uh or overnight low temps have been near uh historical highs throughout some of the central eastern corn belt mainly.
• 3:28
  SPEAKER_01: Um maybe that could have some negative yield implications down the road, too.
• 3:32
  SPEAKER_01: Kind of that exact opposite of that happening right here, isn't it?
• 3:35
  SPEAKER_01: I mean, we're getting down into the 40s here this week, actually, at some of the lows.
• 3:39
  SPEAKER_01: So the exact opposite impact on pollination, uh, maybe that had an impact too negatively, but it's got to stay there for a long time, it seems like.
• 3:47
  SPEAKER_01: So yeah.
• 3:48
  SPEAKER_00: Correct.
• 3:49
  SPEAKER_00: Yep.
• 3:49
  SPEAKER_00: I don't I don't think we're gonna see too big of a problem from that.
• 3:52
  SPEAKER_00: It's it's pretty one thing.
• 3:53
  SPEAKER_00: Yep, it's pretty hard to make a problem there, but you know, that that was definitely talked about a little bit there too.
• 3:59
  SPEAKER_00: Um, you know, another thing that could uh you know kind of uh point to is um China and US trade um tensions maybe easing a little bit.
• 4:08
  SPEAKER_00: Supposedly, um, you know, there's a flash sale there yesterday on some soybeans, 120,000 metric tons um to unknown destination.
• 4:16
  SPEAKER_01: Maybe that was China there is what it was rumored to be China, but you know how that goes, which would be their first sale.
• 4:23
  SPEAKER_01: Yes.
• 4:23
  SPEAKER_01: So that's important for new crop because that's gotta start getting.
• 4:27
  SPEAKER_01: So yeah, yeah, on the soybean side, I mean, there's a few different things that gave that support, but I mean, corn here, it was short covering, a little bit of US heat problems.
• 4:36
  SPEAKER_01: Uh I mean it's nor it it pretty much looks like a bear market rally to me.
• 4:40
  SPEAKER_01: Like it it seems like to really get this thing to get going more and continue and go up another 50 cents, we need some supply problem or something bigger than what this week's news was, Jordan.
• 4:51
  SPEAKER_00: Yeah, I would agree with that 100% that you know we're gonna need something quite a bit bigger to to really feed this thing, and you know, uh of all those tiny little bullish um clips that we just kind of talked about, you know, the market is looking at the chart, and the chart is showing a gap there on December corn.
• 5:08
  SPEAKER_00: Um, to fill that gap, it needs to trade uh 432 and three-quarters.
• 5:12
  SPEAKER_00: I think today's high was 430 and a quarter, is where it kind of came in at.
• 5:16
  SPEAKER_00: So, you know, we still got about a two and a half cent gap that you know needs to kind of be filled.
• 5:20
  SPEAKER_00: The 50-day moving average average is 435.
• 5:24
  SPEAKER_00: So, you know, it'll be interesting to see what kind of happens here um Sunday night if we go up and kind of fill that gap and then you know maybe trade lower.
• 5:31
  SPEAKER_00: Um, you know, one area to kind of look at is uh 386.
• 5:35
  SPEAKER_00: And that was the low that we saw um last year on December uh 24 corn.
• 5:40
  SPEAKER_00: So, you know, I I think uh you know, maybe you kind of get through that August report and uh you know see the USDA raise yield, and maybe we go test that at that point.
• 5:49
  SPEAKER_01: And that technical spots really push below that, then a bunch of stop orders are sitting there just under four.
• 5:56
  SPEAKER_01: That pushes you into slightly into the three eighty's before you put that low in.
• 6:01
  SPEAKER_01: So it's interesting the impact just slightly going below four bucks can have on a market like that on a whole number.
• 6:08
  SPEAKER_01: So that'll be interesting to watch.
• 6:09
  SPEAKER_01: I know technically as well the bulls wanted to close kind of between that, like up to 1040 to 1044 on the Nova beans today.
• 6:17
  SPEAKER_01: Didn't quite get it, so that was a little disappointing.
• 6:20
  SPEAKER_01: Uh same with the corn.
• 6:21
  SPEAKER_01: I I know they would have liked to uh close in that gap or a little bit higher.
• 6:26
  SPEAKER_01: And we'd we traded into the gap, just didn't quite fill it, did we?
• 6:29
  SPEAKER_00: Yep.
• 6:30
  SPEAKER_00: And on Thursday the market was a little bit red, so you can kind of see, you know, that uh you know these this story isn't you know a really bullish uh uh push right now.
• 6:40
  SPEAKER_00: So you know, we had a little little bit of bearish news that turned um Thursday from a green day to a red day rather quickly when Trump was out uh talking about uh working a deal there with uh uh Coca-Cola to kind of lower consumption of corn syrup.
• 6:53
  SPEAKER_00: Um, you know, corn syrup is worth about 400 million uh bushels of corn grind a year, is where it's at.
• 7:00
  SPEAKER_00: So um that's if you took it down to zero.
• 7:02
  SPEAKER_00: Obviously, you wouldn't do that um by just moving uh Coca-Cola away from it.
• 7:06
  SPEAKER_00: But you know, at its peak, it was about six percent of total corn demand.
• 7:10
  SPEAKER_00: It's already down to two and a half, so um not really much too big a story there, and and was able to kind of turn the market red on Thursday.
• 7:18
  SPEAKER_01: And on the soybean side here, uh soybean oil, if you wanted to focus on that one here.
• 7:23
  SPEAKER_01: So soybeans on the November contract, Monday night we got down to, or Monday we got down to 9.98.
• 7:30
  SPEAKER_01: So we rallied about 45 cents low to high there on the soybeans.
• 7:34
  SPEAKER_01: Uh that one saw some really nice rally driven with soybean oil futures.
• 7:38
  SPEAKER_01: That posted their best trade we've seen since September of 2023 this week, and just a lot of optimism, Jordan, regarding uh any pending renewable volume obligations there.
• 7:50
  SPEAKER_01: Uh that's uh really supported the market there.
• 7:52
  SPEAKER_01: So both soybean and cord futures kind of sharply higher on that this morning, and uh the soybean oil futures trade really helped lead the soybeans, I thought, this week on those.
• 8:02
  SPEAKER_01: But like we talked about there, it doesn't seem like there's anything super substantial to just really let these funds pile in and cover all those shorts on the corn side, at least going forward here.
• 8:13
  SPEAKER_01: So we'll we'll need a little bit more out of this market.
• 8:16
  SPEAKER_01: Sunday night's open is gonna be really interesting to see if we go fill that gap and revert, or uh which one of these uh resistance levels really comes into play here on these markets.
• 8:26
  SPEAKER_01: Any final thoughts for our listeners on the grains here this week?
• 8:29
  SPEAKER_00: Yeah, I would uh totally agree with what you said there on Sunday night.
• 8:32
  SPEAKER_00: I think uh, you know, the eyes are gonna be on the forecast of you know what's to come here this week.
• 8:37
  SPEAKER_00: You know, if we uh you know continue to push heat at um you know over a hundred degrees there out in the east and and central belt and they kind of take the the rain out of it, you know, I th I could see them you know taking that uh gap and filling that and maybe pushing above that 50-day moving average.
• 8:52
  SPEAKER_00: But you know, if we kind of continue on this um wet pattern that we've had here so far this summer, which uh is more likely, you know, we'll probably fill the gap and then maybe uh push lower after that is kind of what I'm thinking.
• 9:05
  SPEAKER_01: With that being said, it seemed like uh, especially today, I had a a lot of activity, a lot of options today that got done.
• 9:12
  SPEAKER_01: So something to talk to us about, anyways, on some new crop strategies for this year and next year as well as we start to get some fertilizer quotes out there.
• 9:21
  SPEAKER_01: So time to take a little risk off the table here on rallies in the middle of July on uh on a scare there.
• 9:27
  SPEAKER_01: So last thing I want to wrap up with is basis.
• 9:30
  SPEAKER_01: Uh we saw a little bit of change in that this week, didn't we?
• 9:33
  SPEAKER_00: Yeah, so you're starting to see a little bit of change in basis there.
• 9:36
  SPEAKER_00: Um, you know, starting to see some strengthening kind of going on in the December market, but you know, right around that new crop market, you know, maybe uh, you know, seeing that widen out a penny or two is what what we're kind of seeing.
• 9:48
  SPEAKER_00: You know, this crop is um kind of going through pollination and is looking really, really solid out here.
• 9:54
  SPEAKER_00: Um so we're seeing seeing basis maybe um lighten up a penny or two.
• 9:59
  SPEAKER_00: So um if you got to find a home for some new crop uh bushels there um sooner rather than later is probably uh your best bet.
• 10:06
  SPEAKER_01: The elevators are definitely expecting a big crop in most of these areas here, especially in southwest Minnesota.
• 10:12
  SPEAKER_01: Uh please let us know how your crop is sitting out there if you have uh any uh volatility, I guess, in the crop out there, any vulnerabilities.
• 10:21
  SPEAKER_01: Uh that'll be something we'd want to know about because we just frankly we haven't heard a whole lot this year from that side of the uh uh side of uh things.
• 10:29
  SPEAKER_01: So thank you for your time today, and let me know if you need it need anything here.
• 10:32
  SPEAKER_01: And thank you to all our listeners.
• 10:34
  SPEAKER_01: Please reach out to us at professional eggmarketing.com.
• 10:38
  SPEAKER_01: Check out our other podcast as well, Professional Egg Marketing, that's released every Friday.
• 10:43
  SPEAKER_01: Trading commodity futures and options involves substantial risk of loss and is not suitable for all investors.
• 10:49
  SPEAKER_01: See you next time.