7/8/2022

Corn and soybeans continue higher on a corrective bounce back, still recovering from severely oversold conditions. Trading algorithms love trading headlines and the weather outlooks have given them something to trade. These are the types of short rallies/bounces that we need to look at selling into in a weather market. Proceed with caution on the amount of trust you put in these extended weather models and forecasters that use "hot-button" terminology like "flash drought" or "heat dome." Is there some dryness and portions of the grain belt that could use a drink and do we still need rain to make this crop? Yes, we agree with that but what isn't friendly is Brazil's huge corn crop and how things have changed in demand for U.S. grain. Having a huge price break on the board and seeing no one come in to buy is a good sign that demand has dried up. Weekly export sales were extremely weak with net cancellations of 66.6k tonnes (2.6 mln bu.) of old crop corn and 160k tonnes (5.9 mln bu) of old crop soybeans. New crop sales have been lagging, running around 50% of last year's levels at this time. Given current conditions, we see a $7.50 cash price as a place to look at selling out of old crop corn and anything $15.00+ cash on old crop beans.

December Weekly Continuous. Impressive recovery in corn from the beginning of the week. The question now: Is this a dead cat bounce or something sustainable?