Soft open for most Friday with May deliveries now in play but firming thru the day as now the remaining shorts have to move. Last day using May futures as well, we will be switching to July starting Monday. May corn bounced 14 off the lows, 636 and plus 9 on the day. Wheat up a nickel, 619 3/4. These prices compare favorably with Russian wheat to most so I struggle to see why we would get much push farther down from here. Beans up 17 1/2 to 1444 1/4. Products both bid. May rice up 52 1/2 to 1738 1/2 with Bunge stopping all the receipts and already new cancellations. River freight is cheap. Only 50 May left to deliver and new crop rice has more open interest than old crop. Dow up 271 points to close near the high like most other Fridays, 34,200 while bonds go along for the ride, 131.21, plus a point and 8 tics.
April 27th, 2023
Exports Thursday not surprising anywhere and the China corn cancellations are a drag. May corn off 14 1/2 to 627. Wheat pushing lower as well, 614 3/4, minus 12 1/2. Beans drop 9 1/2 cents, 1426 3/4 with meal OK but oil getting oversold. 1686 rice is off 7. All the grains hit going into delivery on the close and margin clerks forcing out the last of the longs. Dow pops back firm all day and 505 points higher at the close, 33,929. Bonds off a point and 10 tics, 130.13, rejecting the 133 area again.
Risk off day as the Dow drops another 228 points, 33,424 and bonds leak 21 tics, 131.23. Bonds seem to hit some form of headwinds every time they look over 132 lately. Corn off a nickel, 641 1/2 as we approach delivery notice on Thursday close for the grain room. Same story in wheat, 627 1/4, off 11 1/2 and contract lows. Funds have to be short a stupid amount of wheat right now. Front beans down 9 1/4 cents, 1436 as the spread gives up premium. May Rice picks up 3 to 1693 as I struggle to believe commercials wont want nearly carry receipts with a long time to go to get new crop to mill.
Tuesday trade another weak front month soy market as we drop another 20 cents, 1445 1/4. Corn off 4 3/4 as well, 646 1/2. Same tune in wheat, minus 4 3/4 to 638 3/4. Rice spread finally caught a bid with may off 4 cents, 1690. Grain room feels oversold to me down here. Funds can keep up the push if they want but I suspect they wont get as much reward for their effort moving forward. People need to be out of May positions by Thursday close and looking at open interest, most have already made the move. Dow drops 349 points on global instabilities, 33,652 and bonds gain a point and 20 tics, 132.12. Global as well as domestic money supply squeeze and interest rate hikes are having their desired affects. Cant buy it if you don't have the cash.
Monday opened with May options off the board and we reset lower in the grain room. Corn off a dozen, 651 1/4 with talk of a few china corn cargoes cancelled. New crop held up well and those old crop bull spreads need fed every day. 643 1/2 wheat is off 18 1/4 with rain finally making the forecast. Feed wheat a competitor to corn now for sure. Beans trade 1465 1/4, off 18 1/4. Just last week we were hitting against the 1520 options strike. Another reason to recognize how important options positions can be to the stability or instability of a future. Rice picks up 2 1/2 cents, 1694 but all on the strength of July and carry in the spread. We have round tripped from 30 under to 40 over to now nearly 40 under. Keeping a position in old crop has been expensive for some and now with open interest so low, we could have outsized moves with small events moving forward. Dow up 51 points late, 34,001 while bonds gain 27 tics, 130.24.
Friday options expiration and liquidation trade. Beans hit for 14 to 1483 1/2 with weak products. May con off 1/2 cent, 663 1/4, but the rest of the months off about a dime. Spot corn is a bit tight. Wheat down another 6 to 661 3/4. Funds like selling wheat. Rice got a 13 1/3 cent bounce to 1691 1/2 which still left the 17 puts in the money. Will be interesting to see how that unwinds but total May open interest is below 1000, so no big traps set in options expiration. Dow up 41 points, 33,950 and bonds slip 13 tics, 129.29.
Exports Thursday morning a disappointment and risk off everywhere. Yellen talking about political issues with China taking president over finances? Talk about a step out of lane for prepared remarks. Musk blows up a rocket and drops the price of Tesla's again. Poor Tax return totals moves the debt ceiling talk up on the calendar. Lots of things to move markets to risk off. I was really surprised financials held in as well as they did with the Dow off only 124 points, 33,909, and bonds up 19 tics, 130.10. Grains all weak with Wheat off 14 to 667 3/4 and corn hit for 8 1/2 to 663 3/4. Beans off 9 cents, 1497 1/2 as the 1520 crowd gave up. Rice K/N spread gave up the ghost from big premiums to 10 cents carry and May futures off 34 to 1678. That's a buck below where I thought the options boys would want this market to settle Friday.
Wednesday was risk off across the floor. Beans couldn't make 1520 stick and as it rolled lower it gained sellers. 1506 1/2 and I'm open to where it might go over the next few days. Wheat down 16 1/4 to 681 3/4 as reports that ships are moving for Ukraine again. Corn follows, 672 1/4, minus 5 1/4. Rice spreed the feature and it appeared that the short got covered and from there on lack of support. 1712, May futures off 22. Dow in a very quiet range but settles off 91 points, 34,033 and bonds slip 10 tics, 129.23.
Dull Tuesday trade as we need to be focusing on getting the crop in so the computers have less eyes to bait in. Corn up a penny, 677 1/2 and rice gains a cent as well, 1734. Wheat slips 1 1/2 to 698 and beans up 2 1/4 to 1519 1/4, like a moth to light with the Friday expiring 1520 options. Dow off 5 points, 34,124, and bonds bounce 9 tics, 131.01. A few more of the TV talking heads are now willing to say out loud the 2% inflation threshold of the Fed can be adjusted up, at least for the short term. The less the Fed has to bully, the less likely we are to get forced into depression. The real only way out of the massive public debt the whole world has accrued is inflation. You don't have to be an economist to figure that out, but they also don't want to talk about the elephant in the room.
Russia corridor looks to be a growing and real issue moving forward, as well as issues with Ukraine wheat being rejected in Europe for excess and illegal pesticide residue. I think until the conflict is resolved you have to reduce or eliminate for all practical purposes any real amounts of grain exports out of Ukraine, and 1 missile into a Russia vessel could plug that hole as well and global excess wheat becomes global fear of food overnight. Monday wheat up another 14 to 696 1/4, but keep in mind that's still under 7 bucks. wouldn't want to pick a top in that market even though I believe it is the worst written contract. Corn up 10 1/4 to 676 1/2 on a big drop in May open interest going into options expiration and in front of May deliveries position squaring. Rice probes 17 dollars before a rebound to 1733, off 5 1/2. Another options story where Friday settlements are already in focus. 1517 beans are 16 1/2 higher and looking at the big 1520 strike open interest. Same story different grain. Dow up 92 points, 34,129 and bonds lose 31 tics, 129.24. Public talk that the Fed might need to adjust their high side of acceptable inflation is the big story but we need to give it some time to flesh out.