Michelle Rook interviewed me this morning on AgWeb’s Markets Now. We discussed the wheat, soybean, and corn markets. In addition, we talked about interest rates, gold, and the cattle market. WATCH THE INTERVIEW HERE.
Michelle Rook: Welcome to Markets Now. I’m Michelle Rook with Darin Newsom, senior market analyst with Barchart. Multi-lower prices this morning in the ags with the exception of the cattle market. Darin, let’s talk a little bit about the grain sector first in terms of corn. We’ve actually seen a little bit of strength here this week, and some of that has been maybe driven a little bit by demand, maybe a little bit by weather. Do you think we need to put a little more weather premium into this market, and today are we just seeing some profit taking or what’s going on?
Darin Newsom: I don’t know that the new crop corn market, so if we start with say, I know we can debate the September-December contract, but if we start with the Dec-24 contract, I don’t know that we have to build a lot of weather premium in at this point. Looking at the forecast, there’s chances of rain across parts of the Midwest on Friday and over the weekend. It seems like most of the forecasts have been relatively beneficial for the– generally beneficial for the 2024 crop.
We’ll see what the extendeds do. If it starts to turn hot and dry for a longer period of time, maybe that gets the market’s attention. December corn just seems comfortable right now in the $4.60, $4.80 range, doesn’t really want to break out of it, doesn’t really have much reason to break out of that range at this point. We’ll see what happens. Again, it’s a weather derivative, so we’ll see what happens with forecasts down the road.
Michelle: there’s been a lot made this week about some of these extended forecasts, maybe looking hotter, drier into June, into July, so that was why I asked that question. From an old crop perspective, let’s talk about that market because it looked like we got up into chart resistance yesterday, so maybe setting back as a result of that. Is there good demand underlying that market that’s holding that market or that July contract together and cash basis levels together? Is it commercial buying interest demand or what is it?
Darin: It’s an interesting mix right now. We’ve got commercial support, we can see that in basis. The July-September spread’s a little bit difficult to read. Again, the September contract’s a hybrid old crop/new crop issue. We have seen the carry in the July-September whittled away, but I think more importantly in the old crop market is we’ve seen basis continue to firm. My last count, my last calculation came in at 14 cents under July on Thursday evening, which is 3.75 cents stronger than it was last Friday. We’ve seen some commercial support and this is despite the fact July has rallied this week, the July futures contract is higher.
That tells us that merchandisers are pushing, trying to source some supplies to meet demand. Does that mean demand has picked up a great deal? Demand has stayed solid. Most notably, this year we’ve seen an uptick in export demand. It was expected because we actually had the bushels to move this year. Feed demand’s still a question mark. Ethanol demand’s still relatively constant. We’ve seen better demand. I wouldn’t say it’s extraordinary. Basis is still running neutral to weak. It’s not like all of a sudden we’re looking at a red-hot market like what we were looking at a year or so ago when we just didn’t have the supplies. It has changed a bit. We have seen some demand and right now the support is coming from the commercial side.
Michelle: Got you. What about, say, beans? The situation is different there. Export demand is running behind pace, but we’ve had flash sales the last four out of five sessions. Today, we did not have any. Do the old crop sales that we’ve had here, does it really make a difference?
Darin: No, it doesn’t. If we look at the most recent weekly export sales and shipments update, we see that the US based on shipments is on pace to export about 1.68 billion bushels in 2020 through ’24. Right now we’re about 70 million bushels short of that for total sales. The US needs to make some sales here over the last quarter of the marketing year. When we see these spot sales, these sales announced it’s nice, it’s fine. I know a lot of folks get excited about them, but really it’s what needs to be seen if we’re going to catch up, if we’re going to see total sales catch up with the projected pace.
It then comes, as we get deeper into this last quarter, are we actually going to be…
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