Jun 15, 2022

Trade was mixed for a majority of the day with 9-16 cent ranges in corn and 14-23 cents catching most of the ranges in active soybean months.  We did see corn and soybeans trade around 10 cents higher momentarily but action was mostly muted, hanging within 2-3 cents of unchanged.  What happens in the market over the next two weeks is extremely important in terms of establishing a direction.  There is evidence mounting that our high prices have reduced demand that is not priced in and South America has a significantly larger crop than was anticipated 3 months ago.  The USDA reduced corn exports by 50 million bushels last week and made a cancellation announcement this morning of 3-million-bushels of soybeans.  Corn is piling up across Brazil at a nice discount to US corn.  Combining that discount with the strength in the dollar makes importing Brazil corn into the US a very attractive option.  On a macro level we have a largely over heated world economy that is starting to slow and the Federal Reserve raised its target rate by 3/4 of a percentage point only one month after announcing that a rate hike of that size would not be considered.  Weekly ethanol numbers showed an increase in production of 1.06 mln bbls/day and stocks down to 23.2 mln bbls.  Current pace of corn use for ethanol falls short of the USDA target by 25 million bushels for the year.  NOPA crush for May was reported at 171.077 million bushels, slightly short of the average trade guess of 171.552 million.  It's too early to sound the alarm but there is definitely writing beginning to appear on the wall.  The main word being thrown around is "recession" and commodities perform extremely poor in recession scenarios.

The 50-day moving averages on the July and December corn contracts have established themselves as short-term resistance.

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