Schwieterman: Corn basis levels steadily improving

Corn                                             Estimated Fund Position
Trends
Short Term: Down                    Net Long Futures and Options: 75406
Long Term: Down                     Change: +6000
Overnight Trade: N +5 1/4 Z +2
Opening Calls: 3-5 Higher

The May – July corn spread is over 15 cents for only the 3rd time ever. The last time was in 1996 when the corn market made new all time highs. Basis levels are steadily improving, which is also bullish. Everything about the old crop corn seems bullish except the charts. The July corn looks set for another day of consolidation and the bull spreading will likely keep the December contract from keeping pace with the old crop gains.

Wheat                                           Estimated Fund Position
Trends
Short Term: Down                      Net Long Futures and Options: -96205
Long Term: Down                       Change: +2000
Overnight Trade: Chicago: N +4 1/2 KC: N +2 1/2
Opening Calls: 2-4 Higher

Like the corn, the wheat looks set for another sideways trading day. There has been some talk of dry weather in Europe, which is supportive, but with a good crop in the US it will be difficult to draw down world supplies enough to matter. The main supporting factor right now is the huge net short position that the trading funds have in Chicago wheat. Who is left to sell? That isn’t a reason to buy wheat, but it is a reason for the market to quit going down for a while.

Soybeans                                      Estimated Fund Position
Trends
Short Term: Up                            Net Long Futures and Options: 231907
Long Term: Up                             Change: +4000
Overnight Trade: N +11 1/2 X +6 3/4
Opening Calls: 10-15 Higher

Bull spreading was active again overnight and the July contract is approaching $15.00 once again. The news is still the same. USDA has underestimated exports and old crop supplies will be much tighter than USDA has predicted. Meanwhile, new crop stocks will be very tight and we must slow demand. The only way to do that is with higher prices. Buy breaks.

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