Sunday night opening
18 responses | 0 likes
Started by bcb - June 6, 2021, 1:27 p.m.

AgResource calling for Corn up 12-18, Beans up 18-25 and wheat up 9-15  with Minny  leading the wheat complex

By metmike - June 6, 2021, 3:02 p.m.
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Thanks bcb!

By Jim_M - June 6, 2021, 5 p.m.
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By metmike - June 6, 2021, 7:12 p.m.
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Why do you think limit Jim?(you might be right bids are piling in shortly before the open)

LOC high for CZ is 637.25 so we won't get there at +40c limit.

LOC high for SX is 1461, we can blow thru that on the open.

Obviously a huge gap higher coming.

I don't know about how high MWE will go as there are some decent chances of rain in the forecast for ND the next 5 days and possibly more in week 2 as systems hit them over the top of the heat ridge. 

However, crop ratings should be lower on Monday from an already historically bad early rating and the crop may have already been damaged enough to take a great deal of yield potential off the table, even if the weather improves. 

And the rains don't look like drought busters. 

So  extremely volatile this week with potential large drops in MWE with any rain events.

By metmike - June 6, 2021, 8:14 p.m.
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The GFS ENSEMBLE  has been the wetter model recently.

This is what the just out 18z model has just thru 12 days....ok, I updated it thru 2 weeks below.

Not exactly bullish.

Be careful of a gap and crap, buying exhaustion top if the other models move in this direction over night.

However, if the very bullish NWS guidance is right, we can hit limit up.

By metmike - June 6, 2021, 8:22 p.m.
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Also keep in mind that the NWS outlooks on the weekends are automated and sometimes way off. 

However, do note the cooling over the eastern part of the country in the 8-14 day outlook as the heat  ridge backs up.

By Jim_M - June 6, 2021, 8:28 p.m.
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I was closer on the surge.  :)  Not quite limit, but still...impressive.

Why did I think that?  Because I don't think you are factoring in that this crop has to be perfect!  

I'm not "in" either.  I agree with you on the fact that it could be a gap and crap.  So much uncertainty.


By metmike - June 6, 2021, 8:45 p.m.
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If you might be wondering why the market seems stalled out here after the big gap higher, that's probably the main reason........too much rain on the GFS and also the heat ridge potentially  backing up.

If the GFS Ensemble looked like the NWS extended, we would be limit up right now.

By metmike - June 6, 2021, 9:05 p.m.
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We keep hearing that the crop has to be perfect. Maybe thats true.........but I doubt we can stay at $6+  with the new crop and funds still very long if the market thinks we have just a decent crop in a month.

Once most of the crop is planted, no matter what people say we need, every day that we get closer to making the crop is one less day to hurt the crop.

When the weather says that we will hurt the crop, we go higher and with low stocks can go MUCH higher this year if we seriously hurt the crop.

But with the corn planted and doing pretty good in most places, the amount of POTENTIAL damage has already decreased compared to a month ago.

This heat ridge MUST last for us to go higher. Any break in it, for a week for instance, will get the crop 1 week closer to being made and the market WILL take out tons of risk premium with any non heat ridge dominating forecasts.

If we go back to the heat ridge after that, then we can start going back up but with less time to hurt the crop after the upside potential drops each time.

This early in the Summer still has a ton of upside if a widespread dome of death evolves before the end of the month. Corn could hit $10 and Beans $20 if it stopped raining and was 100 everyday.

And the market knows that which is part of why hot/dry this early is so powerful.  But the market, in less than 2 weeks has dialed in massive risk premium for that, which is what its trading right now.

If the forecast or even the extended adds a bunch of rain this week, the market will go down as fast as it went up.

By metmike - June 6, 2021, 9:18 p.m.
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Another item related to that.

Rain is really important at this early stage of development(not too much of course) but sometimes heat is the real we get later into the season. 

Heat in June with good soil moisture is wonderful though as it accumulates HDD's and boosts crop growth. 

Evaporation rates at 90 degrees are something like double what they are at 70 degrees. 

You can have a decent crop with a cool and dry Summer, especially corn.......often better than hot and average rains. 

Heat can dry out the soils early in the Summer, then cause crummy pollination and really take a toll with heat fill after that, even with ample rains. 

Hot air generating weather patterns can also favor less rains.

By Jim_M - June 6, 2021, 10:20 p.m.
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Can’t disagree with anything you said.  It’s very early in the growing season.  There are still a lot of fields by me that are just planted dirt.  But we did just have a nice 2 day rain. Trade lightly and quickly!

By metmike - June 7, 2021, 10:53 a.m.
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As mentioned last night, the MWE had a large drop on the open from the increased rain in the forecast. It's very tricky trying to figure out exactly when these drops will happen.

I would have thought it would occur before the open but I guess we waited for the funds to take usual.

By metmike - June 7, 2021, 11:17 a.m.
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The GFS  has tons of rain........but not the European model.

Still don't think IA will get much rain the next 2 weeks but too many places that are not IA are getting decent rains this week(ND + southern and eastern belt).

And the heat ridge backs up late in week 1 for several days........which turns the heat down.........but could come back in later in week 2.

The uncertainty with this and bearishness of non IA weather is keeping us from taking off.

And the IA and vicinity weather bullishness is keeping us supported.

By metmike - June 7, 2021, 1:24 p.m.
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We already had the massive gap and crap buying exhaustion in the MWE that I warned about and are getting close to filling the gap in the new crop beans.

A ways to go for the new crop corn.

I believe the old crop had gap and crapped and is modestly lower, ready to put in a major reversal day.

12z GFS ensemble continues to back up the heat ridge.

OK, the huge SX gap is also filled.

CZ still has a bit to go.

By metmike - June 7, 2021, 1:58 p.m.
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We should note that in extremely sensitive weather markets, technical formations don't have nearly the same significance as at other times.

The charts just basically follow the weather forecast.

If the weather forecast/maps flip back and forth, then that's what the prices will respond to and they will etch out patterns that are just mimicking expectations for the weather's affect on the crop.

Especially with tight stocks.

So a gap and crap in beans doesn't mean squat if the weather models have the heat ridge returning.

By metmike - June 7, 2021, 11:21 p.m.
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I really have no clue at the moment on where prices are going.

However, I think(but don't know) that its going to take a continuation of hot/dry extended forecasts to add to the current gains.

If the heat ridge continues to back up enough to allow rains to start showing up in the extended guidance, it's hard to imagine the market continuing higher.

On the other hand, if rains almost completely shut down, after this week, its hard to imagine us going lower.

This is what the heat ridge looks like in 2 weeks on the European model.

Weather Model

By metmike - June 7, 2021, 11:28 p.m.
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New crop beans and corn are below their May highs.

MWE easily set new contract highs early Sunday evening after the big gap higher ........then had a massive reversal lower on Monday.

Crop ratings were worse than expected for corn, beans and wheat.

Most of the weather maps at this link are constantly updated. I actually use it several times each day to see  some of the latest forecasts and current conditions.

By metmike - June 8, 2021, 8:21 p.m.
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MWE continues to get crushed from rains in drought stricken ND this week. Down over $1 since the spike high early on Sunday Night.

By metmike - June 8, 2021, 8:32 p.m.
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However, I think the best rains will stay just west of some of the highest producing counties along the MN border.

Regardless, this is the best rain producing event in the far N. Plains in over a year.

Spring Wheat: Production Acreage by County