Grains closed sharply lower on Friday:

Sept Corn – 17 ¼ cents/bu (5.47 ¼ )

Dec Corn – 18 ¼ cents/bu (5.43)

Nov Soybeans – 10 ½ cents/bu (13.51 ¾ )

Sept Chi Wheat – 8 ¼ cents/bu (6.84)

Cdn $ -0.00120 (79.515 cents)

WTI Crude Oil +0.16/barrel (72.07)

Friday saw a weaker tone to corn and soybean values for the entire day trading session, while wheat futures were initially stronger for over half of the day, before finally succumbing to the pressure of double digit losses in the row crops.  Market weakness was a function of weather, more specifically weather forecasts.  While the US Midwest is projected to be hot for the next 10 days, midday maps yesterday showed cooling temperatures for the 11 to 15 day window, with the potential for some precipitation as well.  It should be noted that trade volumes over the past few days have been very light, which has allowed sellers to accentuate the move lower.  While many market bulls chose not to defend their long positions, those same bulls were not exactly running for the exits during the recent 2 day sell off.

While grain prices tumbled on Thursday and Friday, for the week, December corn futures were down 9 cents/bu, November soybean futures were down 40 cents/bu, and December Chicago wheat futures were down 6 ¼ cents/bu.

The debate amongst market analysts is all about the degree to which good yields in the central and eastern corn belt will offset poor conditions in the Dakotas and parts of Minnesota.  Good moisture conditions over the past week, has given most traders comfort that there is little production risk in the eastern half of the Midwest.  To that end, Commodity Weather Group put out their first estimate of the year for USA corn yields of 181.3 bushels per acre (range of 177-183).  This number is higher than any existing production estimates, and helped to solidify the negative tone to the market yesterday.

Soybean futures were weaker in sympathy with corn and as a result of some projections that Chinese buying of initial US 2021 harvest soybeans might be lighter than projected.  Sources are citing a slowing demand for soymeal in China, as  higher protein wheat replaces corn in Chinese feed rations, that lowers the volume of demand for high protein soymeal.  It is too early to project this as a long term phenomenon, but the market is taking notice.  The disappointing overall USA Weekly Export Sales Report from Thursday fuelled some of that concern on Friday.

Wheat enjoyed a nice early rally on Friday, as thoughts that Thursday’s weakness was overdone dominated trade.  However, with corn and beans under pressure, wheat values had to eventually fall.  Minneapolis hard red spring wheat futures led the parade lower, as some pop up showers moved through North Dakota.  For most of that wheat crop, this is too little, too late.  Locally, the latter half of the Ontario wheat harvest has had it’s share of problems, with rains adversely affecting quality in many areas.  Despite record demand for feed wheat, some buyers are taking “advantage” of growers by significantly widening their discounts for sprouted wheat.  Wanstead Farmers Co-op has resisted changing our discount schedule, but will likely be forced to do so in the short term, as moving low test weight/high sprout wheat in the short term carries significant price risk.  We firmly believe that post harvest, discounts will narrow a LOT, so growers should not fret too much about sprout discounts, unless they have to move that quality of wheat right away.

On the day Friday, funds were thought to have sold 20,000 corn contracts (now long 198,000), were sellers of 12,000 soybean contracts (now long only 62,000), while selling an estimated 10,000 Chicago wheat contracts (now short 19,000).  The CFTC weekly report showed that the trade was very accurate in their estimate of fund positions in corn and in soybeans for the past week, but had overestimated fund length in Chicago wheat by 17,000 contracts, which is why fund positions in wheat show as negative following today’s selling.

We continue to trade a full blown weather market.  Direction of prices on Sunday night will be all about any changes to the nearby and extended US Midwest weather forecasts.