Grain Spreads: Liquidation Continues

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Commentary

Corn saw another round of speculative selling between 25K and 30K contracts that pushed the July corn to within 2 cents of contract lows. Even the crude oil story has become separated from corn as it collapses, with July corn dropping 50 cents in two weeks, even as the petroleum gains. A Chinese corn purchase rumor or announcement is probably what is needed to turn the market back higher in my opinion, as higher Argentina estimates and good US Midwest weather are negative supply-side factors at the moment. However, watch for increased talk of a potential flash drought for Minnesota, northern IL and eastern Iowa as rain forecasts are 50/50 to miss this high production area for the next week but there are some precipitation chances in week 2. July corn is testing the 2026 lows from mid-January and December has reached its lowest level since mid-February. It appears that funds are clearing out their longs just as they have done in June 24 and June of 25. Common practice. They will gladly re buy if weather issues emerge, but for now liquidation reigns amid a greenhouse effect getting priced in for early June, which looks warm and wet into month end if precipitation emerges in the I-80 corridor. No trade recommendations as of this post.

Trade Ideas-N/A

Sean Lusk

Vice President Commercial Hedging Division

Walsh Trading

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