As outlined in the lead story this week, this week’s seminar series through Nebraska, South Dakota, Minnesota and Iowa was revealing. Southern Minnesota and northern Iowa do not look good. Way too much rain, there was a lot of late planting and some acres will be abandoned. As we viewed it, however, the rest of the Corn Belt could be in good enough shape to offset most of these problems. We will get a look at Indiana and Illinois next week. It will make weather more important for the next eight weeks and in some areas, there will be more concern about being vulnerable to an early frost. Before that, forecasts showing hot and dry weather across much of the Corn Belt in July will feed some concern.
What isn’t going to happen, however, is changing the old-crop carryover at over two billion bushels. There is still an enormous amount of corn to move to market and that is the primary fundamental. The weather problems are going to have an impact on the crop in the field but a limited impact on the crop in the bin.
Technically, there’s no way to sugarcoat it, it’s ugly. $4.40 support in the July was holding until Friday when July traded is lowest level since March 6. December broke all support Thursday, and Friday traded its lowest price since the reversal up on February 26. Red Dec. traded down to 465 Friday, matching the low made on February 26. One tick lower and it would have been the lowest price since May 22…of 2023.
The funds are not our friends right now. Their record net short was a bullish factor that helped drive prices up through mid-May as they covered their positions. They started selling again since the week ended April 16, adding a net -94,376 contracts to their short position from then through the week ended June 11. A delayed COT report is due out Monday due to the federal holiday this week. Check www.BrockReport.com late Monday for an update, (the report is typically released at 2:30 central and I am on the road for seminars, I’ll do my best.) Below is the most recent data, through June 11, showing that large specs are back to selling in a big way.
Cash-only Marketers’ Strategy: Old-crop sales are now wrapped up at an average price of $5.27, after we sold the final 10% on Thursday. 50% of the 2024/25 crop has already been forward contracted.
Hedgers’ Strategy: Old-crop sales were wrapped up this week at an average price of $5.50. In the new-crop, we recommended adding another 10% short December futures. We were already 10% hedged and 20% short December $5.00 calls at 20 cents. Forty percent has also been forward contracted on cash contracts. That brings the total coverage to 70-80%, depending on how you count the short option coverage. We also took action on the 2024/25 crop Thursday, selling Sep. 25 futures against 20% of expected production.
