Wednesday trade with end of month squaring and adjustments for deliveries. We will switch to Dec for corn and wheat, with corn slipping 6 3/4 to 670 3/4, and wheat gaining 11 1/4 to 831 1/2. Spread unwinds being the most likely blame. Nov beans dropped a dime, 1422 1/2. I'm seeing China buying flashes but the market doesnt mind. I think the bean crop will exceed 52 yield and we will add some acres by the October report. Rice buyer still at it, 1784, up a nickel and he seems to not be afraid of harvest volume. Dow bled another 243 in its relentless march lower, 31,532, while the bonds stall off 12 tics, 136.13.
First notice day Tuesday had some adjustments to the spreads as we finalize positions for delivery in the grain room. Sept beans off 21 3/4 more to close 1513 with a 1480 low, flushing a buck and a quarter down the drain on the suckers that kept their calls on Fridays close, while Nov beans were off only a nickel, taking some of what was an excessive premium out of the front. Something to put in your memory for the future. Same basic story for the meal. Wheat drops 21 3/4 to 798 1/4 as the ships keep moving in the Russia/Ukraine corridor. Corn down only 4 to 679 3/4 and several players looking at a lower corn expectation for the Sept WASDE and declining crop conditions. I'm not as negative in my travels, but I have no real time in Iowa. Rice picks up 15 cents, 1743 and cash buyers all appear to have accepted that to source anything they have to pay $8 or more. Dow off another 300 to 31,775 in a continued painful slide lower, with bonds up 7 tics, 136.25.
The sucker trade of Monday goes to those who were long Sept bean calls and took them home for the weekend because they settled in the money on a thin market Friday goose. Sept beans lose 70 1/2 cents, 1534 3/4, while spot meal and oil hold firm and close a little better on the day, so the crush gains what use to be a good total margin in one day. On top of already great margins. Good day for the commercial and the hedge funds, bad day for the unsuspecting spec. Rince and repeat. Rice gets a stop hunting massacre and Nov gets pummeled down to 1685 before recovering almost all the money back, with Sept at 1728 on the close, off 3 1/2. Good day for the commercial if he got any resting stuff bought and for the hedge funds that surely had a hand in the churn, bad day for the unsuspecting spec. Rince and repeat. Ukraine decided to lob a few missiles in a counter offensive and that spooked some worried about the shipping corridor getting closed, but I doubt that will happen as long as Russia has wheat to tax, and the ground hasn't frozen. Wheat up 35 1/4 to 820, and corn up 15 cents, 683 3/4. Dow in a quiet range and settled off 188 points, 32,075, while bonds lost a point and 4 tics, 136.18. My first read was that this was a good boring day, but my gut isn't buying that. Waiting for another shoe to drop, of the fed to stick a finger in the dyke.
Friday- Sept options expiration made for some choppy trade and a push to the upside. Corn looked up 670 but settled 668 3/4, up 11 1/4. Wheat gained 15 to 784 3/4. Beans up a whopping 52 3/4 to 1605 1/4, allowing (or creating depending on how you look at it) some interesting new long positions in September with only a couple days to notice. Nov beans gained 30 to fix Thursday 25 cent drop and meal was strong. Rice up 15 1/2 cents, 1731 1/2. Looks like the Sept spread has played out to the downside. Powell was hawkish and gave the financial bulls nothing to cling to, and the Dow took a hit, getting worse into the late trade and off 1010 points at the end. That kind of a close will put the world on notice and should make for some lively debate over the weekend, and some frayed nerves by Monday morning. Bonds off 4 tics, 137.22. Next question: what happens first, does the globe run out of food, or money to buy it?
Thursday started with a new reporting system for export sales that failed and had to be retracted. I'll leave it to you to add the government comments. Sept expiring Options are loaded for the long side, and we have been rallying on declining open interest, so it's not hard to get the set back that we did. Wheat the worst as every day the Russia corridor stays open more wheat hits the global market, and Russia is the one bright light in ag production this year. 769 3/4, off 25 1/4. Sept beans off 8 1/4 to 1552 1/2. Nov was off 25 cents. Corn down 8 1/4 to 657 1/2 and the 650 options have the biggest count, so if the market is around there late it is hunting a pin. 1716 rice is down 8 1/2 as the buyer added again with no profit for the effort. Dow popped 315 points, 33,273 but really just a stronger close to a churn day, and bonds recovered a point and 12 tics, 137.26. All financial eyes will be on Jackson Hole today to see if Powell is going to enforce depression or wave his right hand when we need to be watching his left. Markets desperately want to interpret whatever he says as friendly.
Big bean sales reported to China on Wednesday met with buy the rumor, sell the fact trade, ending 1560 3/4, off 6. Wheat up 12 1/4 to 795, and corn up another 5 3/4 to 665 3/4. Corn open interest up tiny and wheat OI down. Not the making of a big bull run continuation to me. Rice off 4 1/2 cents, 1724 1/2, and that was with our big buyer adding 500 new longs at no gain. Friday rice could have some fireworks if we get back down to the 1680-17 options strikes. Dow in churn trade, 32,958, plus 57 while bonds lose another point and 2 tics, 136.14.
Tuesday trade firm across the Ag room again with beans leading the way, 1566 3/4, up 39 3/4 more. Beans at least gained some Open interest, so we do have new buyers at the dance. 660 corn was up 26 1/2, but that was with a decreasing open interest. Same in wheat, up 12 1/4 to 782 3/4. I would remind you that bulls need fed every day, and there appears to be not much of that in this corn and wheat rally. Crop tour is throwing out some pretty bullish yields, which is running off shorts, but my fear is at some point soon the actual combines will be creating sellers. Rice up 16 1/2 to 1729 and $8 cash new crop is trading. Deep in the money Sept options looked to have rolled up to 1680 so 1680 and $17 could make for some interesting pins on Friday if a big player wanted to trap someone less savvy. Dow off another 155 points, 32,901, and bonds looked higher but couldn't , ending off 13 tics, 137.16. Bonds are hinting to me that behind the scenes at Jackson Hole the real topic will be unwinding the FED balance sheet smoothly, not short term rates.
Financial room crapped out with the Dow getting hit 650 points, 33,056, and bonds off 18 tics, 137.29. Dow off 1100 points in a week. Grain market shook off our strong currency and global compression fears with corn up 7 1/2 cents, 633 1/2, and wheat gaining 17 1/4 to 770 1/2. Concerns that heightened bombing in the Ukraine might squeeze the shipping corridor. Meal strong again and beans up 38 1/4 to 1527. For now Nov has also strongly rejected anything under $14. Rice up 4 to 1712 1/2 with the spread roll continuing and holding above the $17 Sept call strike where 500 contracts should act as a magnet.
Rice the leader Friday as we pop 53 cents to 1708 1/2 with what looked like the fund seller buying back his latest selling folly. Wheat up 21 3/4 to 753 1/4, but that's just getting us back to what I thought was a floor. Corn up 6 1/4 to 626 and back up to Mondays close. Sept beans off 6 3/4 to 1488 3/4, and Nov hanging out near $14. Dow was hit for 275 points, 33,706 and bonds got hit for a tic shy of 2 full points, 138 15. Europe has some real problems that look to be getting away from leadership, and our currency seems to have no end to its strength.
Thursday morning exports nothing exciting but meal found a bid and beans came along for the ride, 1495 1/2, plus 20 1/4. Corn picked up 4 3/4 to 619 3/4. Wheat was just a dog, 731 1/2, off 31 3/4. Really thought 750 would provide some form of support but the sell systems cut thru that like a knife thru butter. You can bet that the sell systems are learning from that order flow. Might want to take a peek at the way oats have folded. I'm worried that cheap Russia/Ukraine prices are going to drag everything for the next few weeks. Rice off 11 to 1655 1/2 with big spread roll and longs giving up to resting bids. No reason to pay up when the sellers are knocking on your door. Dow in a simple churn day, 33,981, up 18 points, and bonds gain 4 tics, 140.14.