Delivery pressure relieved for Thursday morning and the market responded with a 7 cent rally in corn, 311 1/2. Beans pop 18 1/2 to 850 1/4 with meal up over 6 bucks as well. Wheat even finds a bid, 529 3/4, plus 10 1/4. Rice mickey mouse rally from Wednesday was sharply rebutted, 1715 1/2, down 84 1/2 cents, and dressed up late to not lose over a dollar. Dow off 336 to 24,230, and that was with some reasonable earnings numbers. Bonds slip 11 tics, 181.01.
Dow strong again Wednesday with some surprise earnings reports and what I believe might be signs that the Fed might move the US to a negative interest rate environment. That's my call, not the talking heads. Give them time, they will figure it out. Bonds off 15 tics, 181.12. Corn up 1 3/4 as the fund sellers either took a break, or are getting full at a bad time to be short in the calendar. 304 1/2. 220 new corn receipts registered but dates are still very old. Beans gain 5 3/4 to 831 3/4, with light meal deliveries and no beans. I call that friendly. Wheat off 7 1/4 to 519 1/2. No deliveries. Rice closed at $18, up $1.14. That's a stupid high number, and with only 7 deliveries, but 344 still open, there is a commercial struggle going along with a spec short squeeze. I'm betting that regulatory is getting involved as well about now. For reference, I can buy 50# of milled USA rice, from an Arkansas company, at Costco for $17.49. Almost 2 pallets full today when I was there. I'm betting all that unused restaurant rice is starting to need to find a home.
Markets are settling down going into month end, with corn off 2 3/4 to 302 3/4, first intentions tomorrow. As a reminder, you need to be out of May positions tomorrow to avoid risk of deliveries. Of course, just like most other cycles, the funds know you have to get out of longs tomorrow, so pressure away. Beans off 3 cents, 826 with meal losing $3. Will be interesting to see what deliveries we get for may. My call is not much. Wheat up 5 3/4 to 526 3/4. Dow closes 46 higher, 24,045, but that's almost 400 off the highs. Bonds up a point and 9 tics, 181.27. Just another day for the computers to churn.
Funds and commercials each trying to get books balanced by first notice day in the ag markets, or use the margin clerks as leverage. Rice up 37 1/2 cents, with 325 vs cash, and down to 661 OI in the may. Added to the mix, after all this run, the exchange has raised margins today. Corn down 10 1/4 to 305 1/2 with more talk of ethanol demand destruction if this shutdown continues, and first notice day ahead pushing out stubborn longs. Funds appear to be adding to an already big short, but they did the same stupid move last year at this time, to their detriment. Planting is running a little ahead, and exports are expected to be solid again Thursday. Beans off 3 1/4 to 829, and wheat presses 5 3/4 lower, 521. Dow up another 341 to 23,999, and that flies in the face of the grain pressure from an extended shutdown. I will argue that as States follow Georgia and start to reopen, we will see an increase in ethanol usage starting next week. With crude and ethanol plants shut in, it would be a great time to stick the consumer with a supply squeeze, real or imagined, or just created. Bonds off a point and 18 tics in churn, 180.18.
Friday grains soft with corn off 3 1/2 to 315 3/4, rolling into first notice day next week and the margin clerks putting the pressure on remaining longs. Wheat hit hard, 526 3/4, down 20 1/4 and the spread going from premium to discount. Beans off 7 to 832 1/4 with weak bean oil. Rice in a violent range over $1 but closing 6 1/2 lower, 1661. Spread trades $2 over as shorts overstayed their hands, and clearly commercial long wants physical. Dow up 321 points, 23,658, and bonds up 19 points to 182.00.
Churn goes on in the financials, Dow closing of 19 points, 23,337, but close is really just a number right now. Bonds up 14 tics, 181.13 and again, in the noise range. China Ag demands stories playing against sell pressure from options expiration and first notice, kind of messing with the quants by my guess. Corn churns but off 1 3/4 to 319 1/4. Wheat up 4 cents, 547. Weakest structural contract on the exchange just wont roll over. Beans up 4 1/2 to 839 1/4 with no help from meal. May rice closes up 85 cents, limit, on another day of short squeeze. 1667 1/2. USDA had rice carryover at a stupid high number not that many months ago. How many beans do you have in your bin? USDA says you have tons. Just like rice, not that many months ago.
China buying is the lead story for Wednesday, with corn gaining 8 1/4 to 317 1/2. Funds are short over 160K of corn by my count, Options guys only know how to sell calls, farmer isn't motivated to grow a record crop, and china is buying. What could go wrong with a short position? Beans up 4 to 834 3/4 with china flash sales. Rice up 68 1/2 to 1582 1/2 as the old crop shorts are being squeezed mercilessly. Wheat closes 543, off 3 3/4. Dow up 427 points, 23,356, and bond slip a point and 9 tics in range bound churn, 180.31.
Corn off a nickel, 309 1/4 to close out Tuesday trade, but well off the lows. Oats have found a bid are are nearing $3 again, abet quietly. Wheat down 2 cents, 546 3/4. Beans lower early but close up 4 1/4 to 830 3/4. Meal gains $3.50. Rice shorts in may getting squeezed in front of options expiration, 1514, plus 58. Dow gets hit for 559 to 22,929. Bonds up a point and 16 tics to 182.08.
Crude calamity spills over to Ag as corn off 8 cents, 314 1/4. Beans drop 6 to 826 1/2 with weak meal futures yet again, even though I'm told cash meal has firmed. Wheat up 15 1/4 on supply worries continuing, 548 3/4. wheat approaching $2.50 over corn. Rice up 6 1/2 with options Friday, will be the indicator, and its out sized, 1456. Dow down 671 to 23,488 and bonds up 28 tics, 180.24.
President Trump has moved the corona conversation towards how we reopen the country for business, and putting it into governors hands. The middle of the country will lead the way, as the fly over states are the real backbone of the country anyway. Expect more and more positive news as the week progresses, but I would caution that the stock market has already built much of this in by my count. Dow up another 752 Friday to 24,159, while bonds are off a point and 17 tics, 179.28. Just a big range in the bonds, and the Dow is still trying to determine how far they can push the range to. Corn up 2 1/2 as this 320 area has been more stubborn than some of the fund bears expected. I have funds short 140K or so of old crop, and that's a big short with almost nothing in the ground. 322 1/4 close. Wheat up 3 3/4 to 533 1/2 and foreign suppliers like Russia are still waffling about how much they are going to allow to ship. Beans 832 1/2, off 4 1/4 with meal the weak link again and dropping $3.60. Funds have went from a sizable meal old crop long to a short in a week and a half. Carry in the spread and net short is a much tougher position to defend, so I would expect this week to have some meal stability, and strength later in the week if everything else holds. Rice gains another 17 to 1449 1/2 with strong bids in the spread roll yet again. July is now lead, and September has over 3600 open, a sign that some big long side players want more protection to get over the hump than usual. This coming Friday will have near 1000 rice call options in play, with a surprising amount of the longs, like almost all, on the commercial side. A 40-50 cent break would negate an awful lot of longs, so it will be an interesting trade. Keep some dry powder.