Monday, July 1st, 2024

By:  Patrick Hayes

 

It is up to the Funds and weather risk now:

7/1/2024

On Friday, the USDA destroyed the hopes of a rally based off fundamentals and gave that power to the funds and possibly weather.

The funds remain massively short in both the corn and soybean markets, and they appear to have better weather guys than the rest of us. The weather forecasts that predicted a hotter and drier July have flipped for the start of July. The forecasts now call for a cooler and a wetter start to the month. Heck, Sunday morning at 9 am it was 58 degrees with an expected high of 67 degrees for the day here in Wisconsin.

The funds have the power right now and will dictate price direction for both corn and soybeans. At some point, the funds will not be able to push prices lower and that will come when end users start locking in cheap corn and soybean prices by going long.

The weather guys have been unable to present accurate forecasts beyond seven days so there is the potential that current forecasts are wrong too. Bulls will need to see a dramatic change in weather risk to push prices higher without fund liquidation.

The two charts below were my expectations on 6-3-2024 with weather risk at the time of publication and before the USDA increased corn acres.

December corn futures (weekly with earlier weather expectations):

November soybean futures (weekly with earlier weather expectations):

The hardest thing to do for anyone selling corn or soybeans is to change their expectations. Yet, market forces change those expectations regularly during the growing season. I heard of one company calling for corn planted acres to drop to 88 million acres; I hope they have the courage to realize that the market will trade 91.5 million acres and adjust their outlook.

You won’t like it, but I am changing mine!

We made our first 20% sale of 2024/25 corn sales at $4.81 (the big red X in the chart below}. My sell targets to get to 50% sold of 2024/25 corn is now between $4.60 and $4.90 (green horizontal lines.)

December corn futures (weekly):

This adjustment is needed and gives us a realistic opportunity to make sales that few will make.

Back on 2-15-2024, the USDA projected an average corn price received on the farm for 2024/25 crop at $4.40, that equates to a $4.60 futures price. The USDA was expecting ending stocks at 2.532 billion bushels.

The July USDA Supply and Demand Report will show ending stocks between 2.3 and 2.35 billion bushels. Corn fundamentals are still better than what the USDA estimated in February. Therefore, I expect the average cash price you receive on the farm to be close to $4.40 a bushel. This is not the time to sell your crop.

 

Soybeans:

We made our first 25% of 2024/25 soybean sales at $12.11½ (the big red X in the chart below}. My sell targets to get to 70% sold of 2024/25 soybean is now between $11.75 and $12.20 (green horizontal lines.)

November soybean futures (weekly):

This adjustment is needed and gives us a realistic opportunity to make good sales.

Back on 2-15-2024, the USDA projected an average soybean price received on the farm for 2024/25 crop at $11.20, that equates to a $11.60 futures price. The USDA was expecting ending stocks at 435 million bushels.

The July USDA Supply and Demand Report will show ending stocks between 430 and 460 million bushels. Soybean fundamentals are about the same as what the USDA estimated in February. Therefore, I expect the average cash price you receive on the farm to be close to $11.00 a bushel. This is not the time to sell your crop.

Farmers want everything to stay the same because change often hurts! Putting your head in the sand will not make you a better marketer.

Who knows, maybe the weather will get hot and dry, or the market will realize that the Russian crop is burning up and we will have a new adjustment to make.

I, much like you, would love just to have a set plan and have it work. Then I could relax on the beach without sand in my ears.

But then again, don’t you want to grow your business? That means winning! I want to win! But I know that sometimes I will have to take some losses along the way. Growing our businesses depends on how well we do with adjustments.  

We are emerging here as a better Hedge Plus. Later today we will re-launch our one, singular website, with more upgrades and enhancements to come. I also expect that over the next 30 days you will start to see us putting out vlogs, and growing our presence on X. We will also be adding AI to our analysis giving you more information than ever before, all while focusing on you as we have always done.

Change can hurt or it can make your operations great. The goal deep within my soul is to help you be great!

The USDA, the funds and weather have set prices back, that is all part of farm marketing. There will be opportunities ahead and we will be there ready to pounce. – Patrick