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Let's just say that the producer will be more than happy if nearby corn returns to $4, nearby wheat in Chicago and Kansas City to $5 and nearby beans to $9. We've taken off the bearish edge with this week's short covering rally as funds got a little too cocky and pressed everything below the cost of production well before we've ascertained that there was too much produced this crop year. That may come at harvest if Mother Nature is kind the rest of the growing season or, if she isn't then producers will be looking to sell 2020 and 2021 crops on production concern rallies. Hopefully, those who make a profit at $4, $5 and $9 take advantage this time around. The trade is awaiting any word on how the agricultural community gets protected by this administration from any detrimental impact from a trade war with China. Direct payments on bean production? Payment-in-kind certificates? Who knows ? But, the news of help is on the way stopped the price plunge.

Please remember that the CME increases the monthly storage fee for corn and bean contracts starting with SX and CZ this crop year. We're up to 8 cents per month while wheat is still a moving target as we are at the minimum rate of .00165 cents/bushel/day yet might go a lot wider if the circumstances, situation and variable storage rate moving average allow! If space is tight enough to command 8 cents/month for corn then we will be staring at one heck of a big crop this Fall. In the past, when storage got tight basis levels fell..it all comes out in the wash!

Bean spreads remain soft and sloppy while corn and wheat spreads appear to have stabilized given production and/or quality concerns. We're always looking for those limited risk bull spread near full carry opportunities but, nothing stands out, yet! And, the attitude surrounding the bean market is that it may be years before we make a dent into stocks to spark a run on the spreads because of supply concerns. Beans are like the Blob, just getting bigger, larger and wider each year!

The information contained on this site is the opinion of the writer and obtained from sources cited within the commentary. The impact on market prices due to seasonal or market cycles and current news events may already be reflected in current market prices.

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Steve Bruce


Walsh Trading
312 985 0156
888 391 7894 toll free
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sbruce@walshtrading.com
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About the author


Steve Bruce comes from the cash grain side of the market working for General Mills at the ChicagoBoard of Trade in the summers in the 1970's calling the country to buy wheat at cheap basis levels and with Illinois Grain learning the barge trade. He then spent the 80's , 90's and 00's servicing commercial clients with Geldermann and Man Financial from the trading floor of the Chicago Board of Trade shared market perception via print and electronic media. Steve takes a fundamental approach to market analysis. He completed his undergrad at Marquette and MBA at De Paul. Steve believes in the free market, Chicago School of monetary policy, and less government involvement and intervention in the grain markets. He is risk adverse but emphasizes spread trades for optimal hedging profitability. Steve can be contacted at 312 985 0156 or 888 391 7894 or email him at sbruce@walshtrading.com.
 
 
Contributing author since 06/14/2018 

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