Improved weather helped producers get back to planting and some profit taking showed up in the virtual pits. For the week, the nearby wheat contract lost 19 cents and the July corn contract fell 19 cents. Poor demand and improved conditions returned to the soy complex. The July soybean contract subtracted 43 cents while July meal weakened $21.80 per ton. July cotton shrank by $4.37 per hundredweight. Over in the dairy parlor, July Class Three milk futures declined 42 cents. The livestock market was mixed. June cattle fell $2.15. August feeders cut $3.83. And the June lean hog contract added 7 cents. In the currency markets, the US dollar index was even. July crude oil lost 74 cents per barrel. COMEX gold shed $12.10 per ounce. And the Goldman Sachs Commodity Index was off more than six points to settle at 574.70.
Yeager: Joining us now is regular Market Analyst Shawn Hackett. Hello, sir.
Hackett: Hello. You know there’s no place I’d rather be.
Yeager: I know. And that means a lot. And you have a lot to talk about. I’m going to tease a tiny bit. It’s going to be bearish for a while. But you have some bullish sentiment to come in our discussion. But the question I’m going to lead with is, is the party over in the wheat market for the foreseeable future?
Hackett: I don’t believe the party is over. I think it’s taking a rest. We had a big, big rally. Harvest is right around the corner. The crop is the best we’ve seen in the four or five years and we know harvest pressure, farmers are going to start selling out of the field. And so, I think that’s, for now, going to put a pause in the market. But I don’t believe the party is over. I still think there’s more time to go before you have to leave for good.
Yeager: Do you get the sense, though, that that was the, when I use the party reference, that everything else was just kind of stuck in the morning after because of wheat? Is wheat really a leader right now in grains?
Hackett: It is the leader. It has been the leader. And I think it’s going to continue to be the leader for a while. The Russian drought and double day frost worst in history there, it’s a major crop problem. We haven’t had a major crop problem in Russia since 2010-2011. And when we start dialing in what that production looks like it could be as much as 20 million metric tons below what it was supposed to be and they set the global price for wheat. Everyone trades off of them. That is the key.
Yeager: How long are we looking at here for this we’ll say pause sideways, or lower, before you see us moving higher?
Hackett: I think we can pause into mid-June in grains and wheat. But I think after that the weight of the lost production in Russia will come back and the market will then have to react and add additional premium. But I think into mid-June is what I would expect.
Yeager: Old crop corn struggled, like most crops did. Did enough farmers take enough of an opportunity to sell, in your mind?
Hackett: I think they did. Certainly, my customers took advantage of it and we were strong supporters of selling cash corn here in late April into May. I think we got a lot done. It’s obviously what kept the corn market not chasing wheat as much as many would have liked. But that’s the process of kind of cleaning up the market and getting ready for what we think is going to be an interesting hot July here for the growing season.
Yeager: Well, Matt in Iowa has your next question, Shawn, and it’s about new crop. June has historically seen a rally in grains and provided a window to sell old crop and get some new crop sales booked. Will we see that rally in the same timeframe?
Hackett: Well, I think we had our opportunity here already. I think that first selling opportunity in cash was already, we already had it. I think we’re going to correct into mid-June. I think your next selling opportunity is going to occur mid-to-late July if our hot July forecast is correct. So, I think there will be another opportunity, but I don’t believe June is going to give it to you like it has in many years before.
Yeager: Are we in a big slide in new crop until July?
Hackett: I don’t think we’re going to retest the March lows. I think we’re going to make a higher low. But I do think we could give back at least 50% of the rally we’ve seen in corn. And we’re already on our way doing that.
Yeager: Do you get the sense that this planting delay, we’re just about five-year average, we’ll probably see again pace as it was pretty dry in a lot of places — is the weather window and any premium added to the market shut?
Hackett: I think the planting situation is not going to create a rally. I think we’re getting the crop planted. The good moisture does far more good than it does bad. I just don’t see that being a strong story…
Read More: Market Analysis with Shawn Hackett