Corn and Soybeans: Mind the gap

Over the past few decades, helping hedgers and speculators position themselves to market their crops to smooth out their cash flow while attempting to leave the upside open in a weather-related event, it looks as though this year is going to be another complicated one. Only the individual farmer knows his break even point, and this is where strategy and cost analysis becomes a paramount role in creating a successful marketing year. Over the past 24 hours, we have seen a technical gap lower in corn and soybeans based on a forecast of rain developing in the Midwest over the short-term and long-term weather models. July corn fell 6 1/2 to 334 while September dropped 8 1/2 to 328 3/4, and don't forget about November Soybeans down 15 1/2 at 875 1/4. Ask yourself, does this concern you, and are you adequately hedged? Corn export inspections for the week ending July 9 came in at 902,623 metric tonnes compared with expectations for 600,000-1.15 million tonnes. Cumulative inspections year to date are well below this time last year and are a potential warning that unless some big weather-related event occurs, it will be advantageous to get some hedge on sooner than later. The same week's soybean export inspection came in at 483,331 metric tonnes compared with expectations of 350,000- 700,000 tonnes, which cumulatively is 2.2% last year.

Corn Technical Backdrop

The intermediate term trend for September Corn is threatening to turn lower with the 18 DMA at 336 3/8 and looking to cross below the 40 DMA at 334 7/8. With ADX at 17.65 the strength of the upward trend is weakening. Keep an eye on your levels with an 8 cent daily average true range and be sure to subscribe to a two week free trial of the Grain Express for all your key support and resistance levels as well as daily commentary from our in house AG specialist Oliver Sloup.

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Soybean Technical Backdrop

With a gap lower in November soybeans and am accelerated price break suggests the trend is turning lower. Keep an eye on the 18 DMA for September at 878 3/8 and the 40 DMA at 871 1/2, with the average true range at 11 cents we could see another crossover soon.

Good luck and good trading,

Phillip Streible

Chief Market Strategist


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