Market Commentary for June 22, 2016

Current market tone:  Corn 2 to 4 higher, Beans 3 to 5 higher, meal $1 to $3 lower, KC wheat 2 to 4 higher, Chicago wheat 4 to 6 higher.  Overnight markets were mixed - weather across much of the corn belt saw some nice rains with more expected today – portions of the West did not see much of any precip however.  Majority of the crop should be in decent shape going into pollination after this and other forecasted precip hits.  Expanded limits on corn today – 40 cents – due to the limit down close yesterday in 2 of the nearest 5 months.  Some rumors floating around that China may have booked 2 to 3 old crop and 3 to 4 new crop vessels of beans over the last couple of days due to the break in futures – bean basis at the gulf has firmed though likely some of that due to an increase in barge freight values.  July options expiration this Friday, Cattle on Feed report as well.  Market likely to focus on weather at least near term – conflicting forecasts for now for the out forward outlooks.  

      

  HIGHLIGHTS

·        MACRO: The Brexit vote is a day away and markets are steady. Polls are mixed on the outcome--an exodus is believed to dampen the EU’s growth prospects.   ASIA: Shanghai gained .95%; the Hang Seng rose .61% while the Nikkei retreated .64%.  EUROPE:  Slightly higher with both the FTSE and CAC up .27-.28%; the DAX is .55% to the plus side. WALL STREET: Pre-markets point to a slightly firmer start with DOW futures up 12; the NAS is 4.75 higher and the S&P, +1.25. OUTSIDE  MARKETS: The $ Index is .241 lower at 93.820; gold is off $4.30 @ $1,266.6; August crude, +$.40 higher at  $50.25

·        T-storm Weather: A warm front and strong wave produce a heavy thunderstorm cluster today within a swath of the Corn Belt – especially the northeast third to half.  Very warm to hot weather generally follows / continues into at leastSunday.  A cool front breaks heat Sunday-Monday with the main uncertainty regarding thunderstorm coverage and amounts; scattered 0.25" to 0.75" amounts most likely.  Temperatures turn seasonable next week, causing intense heat to gradually bake the West

·        CNUp $.0025 @ $3.9650; CZ, Down $.0050 @ $4.0825.  Heavy fund liquidation with rains on the way—35 K       

·        SN, Up $.0250 @ $11.2575; SX, Up $.0175 @$11.1250.   Funds sold 25K SB yesterday; 12 K SBM and 4 K SBO

·        WN, Up $.0325 @ $4.6175; WU, Up $.03 @ $4.7550.  The funds sold 10 K on Tuesday

CORN/SORGHUM                                        &n​bsp;                       &nb​sp;                       &nbs​p;                        ​;                   

• December 2016 corn futures closed at $4.08 ¾ Tuesday—lowest settlement price for the contract since May 31
• ATI Research: U.S. corn exports to range from 45-53 mbu per week over the next month, which is 7 million more than last year’s average and record large for this time of year.  The latest 5-year average is a modest 31 mbu per week
• Consultant: Brazil corn crop estimate is unchanged this week at 75.0 MMT.  Hot and dry weather in central Brazil and a prolonged period of freezing temperatures in Parana have led to an erosion of the Brazilian corn production
• Ethanol margins: $0.28 per gallon—up from 0.24 last week but below $0.42 last year.  EIA report at 9:30 AM CDT

SOYBEANS/WHEAT

• November 2016 soybean futures closed at $11.10 ¾ Tuesday—lowest settlement price for the contract since June 6
• ATI Research: Expect near-term U.S. soybean exports to average around 5-9 mbu per week vs. 7.4 for the 5-year avg.
• Consultant: Brazil soybean crop estimate is unchanged this week at 95.5 MMT.  The soybean harvest ended up on a very weak note as the last yields in the northeastern region of the country were very disappointing
• ATI Research: Expect near-term U.S. all wheat exports to range from 15-20 mbu per week vs. 13.7 last year  
• ATI Research: U.S. hard red spring wheat yield is estimated at 45.7 bpa compared to 46.2 last year  

ENERGY

·        Higher: CLN16, +$0.40, $50.25; EBQ, +$0.48; EBQ-CLQ, $0.86,+$.08; RBN, +$.0097;  NGN, -0.033; HON,+$.0097

·        EIA estimates: crude, -1.6 (API: -5.2); Gasoline, -0.5 (-1.5); Distillates, +0.1 (-1.7)

• A notably weaker tone was seen in cash ethanol markets on Tuesday: Chicago down 5 ½; New York slipped 4 ½; Gulf declined 5 ¾; Dallas eased 2 ½; Tampa off 3 ½; and LA was 4 ½ lower at $1.73 per gallon
• Ethanol RINs firmed: 2014’s up ¾ at 83 ¾-84 ¼; 2015’s added ¾ to 83 ¾-84 ¼; and 2016’s climbed ¾ to 83 ½-84
• The July RBOB/July moved to a carry, sheding nearly 7  ¾ cents to +.0199/gallon.  Trading g+.0352 this am                          &nbs​p;   

 LIVESTOCK/POULTRY                           ​;                        ​  

• Choice boxed beef values declined $1.42 on Tuesday, are down $10.19 vs. last week and the lowest since May 12
• Light cash cattle trading occurred on Tuesday in Kansas at $116-117, which is $4-5 lower compared to last week
• USDA mandatory pork carcass cutout value firmed $1.01 on Tue. to $88.19—the highest level since Oct. 21, 2015
• CME Lean Hog Index was up $0.21 on Tue. to $83.13.  July futures eased $0.225 but are still $3.07 above the index

6-10 day forecast: <http://www.cpc.ncep.noaa.gov/products/predictions/6-10_day/​​​>​​​

8-14 day forecast: <http://www.cpc.ncep.noaa.gov/products/predictions/814day/>

Precip estimates: http://www.wpc.ncep.noaa.gov/​​​​qpf/p120i.gif?1432640931

Sources: Bloomberg, Dow Jones, AP, T-storm Weather

Have a great day! – Paul

 

 

 

 

Paul Dubravec

Vice President

Advance Trading,Inc

pdubravec@advance-trading.com

Off: (800)664-2316

Cell: (309)824-5687

Skype:pdubravec

Yahoo IM: pdubravec