There was a difference of opinion among global media sources as to how the past few days played out. This was expected.
The bottom line is it doesn't really matter, as minds will not be changed either way.
The Grains sector was quietly lower overnight through early Tuesday morning, the spotlight on the weakening US corn national average basis market.
Morning Summary: It was interesting, but not surprising, to see the commentary following Monday’s volatile session across most market sectors. On the US side of the border, the theme was John Wayne had ridden in, talked tough, and made his enemies bow to his will. Elsewhere, though, the talk was of how both Mexico and Canada already had plans in place to make changes and it was actually the US president who blinked and delayed tariffs due to the almost universal negative press he had received. What actually happened? Does it really matter? The end result was, as expected, the much-ballyhooed tariffs weren’t real, and markets went along their merry way. A good friend sent me a message that read, “Social media, and media in general, has wrecked this country. There’s no good news source these days.” I agreed in part that social media has sapped our intelligence, not just of the US but around the globe. But according to news sources I still trust, the account from outside US borders of how the past few days played out seems to be the more accurate. But we can’t know for sure, and the US president’s believers will never be convinced otherwise. So again, it doesn’t matter.
Corn: The corn market was quietly lower pre-dawn Tuesday. What does this tell us about how the rest of the morning will play out? Nothing. March (ZCH25) initially poked its head back above $4.90, hitting an overnight high of $4.91, up 2.25 cents from Monday’s close before easing back below the round number on trade volume of 20,000 contracts. It was a similar story with the May issue as it hit a high of $5.02 and was sitting near $4.99 at this writing. May will be moving closer to the spotlight as this week unfolds given the Goldman Roll is scheduled to begin Friday and funds still holding a large net-long futures position. Since last Tuesday, the March issue was up 3.5 cents, and May was sitting 3.75 cents higher at Monday’s close indicating Watson had continued to add to its position. We’ll see what happens today. Fundamentally the market hasn’t changed much. Recall from Monday’s Afternoon Commentary that both the March-May and May-July futures spreads closed unchanged from last Friday. Later in the evening, the National Corn Index was calculated at $4.5525, up 5.5 cents as compared to the gain in both March and May futures of 6.75 cents. In other words, national average basis weakened by 1.25 cents Monday.
Soybeans: The soybean market was also quietly lower overnight through early Tuesday morning. March (ZSH25) never got above unchanged, at least as of this writing, before slipping as much as 10.0 cents on light trade volume of 17,200 contracts. It was a similar story with the May issue as it dropped 10.25 cents while registering 8,000 contracts changing hands and was sitting 4.0 cents lower pre-dawn. The US soybean market has made it through another Chinese New Year holiday, though there didn’t seem to be much interest from the Eastern Hemisphere overnight. Looking back at Monday’s session, though, with the weaker carry in futures spreads at the close, it would not be surprising to see export sales were made to Western Hemisphere buyers. That being said, both the March-May and May-July futures spreads continued to cover a neutral level of calculated full commercial carry. As for basis, the National Soybean Index was calculated near $9.9450 putting the latest national average basis calculations at 63.75 cents under March futures and 78.25 cents under May. Last Friday’s figures were 64.5 cents under and 80.0 cents under respectively. Looking at Watson, both March and May were up 13.25 cents fom last Tuesday’s settlement at Monday’s close.
Wheat: The wheat sub-sector was back in the red early Tuesday morning, led by the March Minneapolis (HRS) (MWH25) issue. Here we see March lost as much as 9.0 cents on solid overnight trade volume of 2,500 contracts and was sitting 7.0 cents lower at this writing. What makes this activity more interesting is spring wheat’s basis remains the more bullish of the three in the sub-sector with Monday’s calculation coming in at 20.5 cents under March futures. Last Friday’s figure was 20.75 cents under with the previous 5-year high weekly close for this week at 20.0 cents under March. Since last Tuesday’s settlement, March Minneapolis was up 18.75 cents at Monday’s close indicating Watson has been busy covering some of its still near record large short futures position. March Kansas City (HRW) was down 5.25 cents at this writing after sliding as much as 7.75 cents overnight. Monday’s close of $5.8575 meant March was up 24.75 cents from last Tuesday’s settlement, again indicating strong short-covering activity by Watson. The new-crop July issue was down 5.5 cents to start the day, slipping back below the $6.00 round number overnight. March Chicago (SRW) was down 3.5 cents after dipping as much as 5.5 cents overnight on trade volume of less than 8,000 contracts.
