Futures Commentary – June 8th, 2012

For the time being, European debt concerns have eased slightly giving way to a retreat of the dollar index from its relatively high levels. The Dow has moved higher too and is up 342.39 points this week to finish trade Thursday at 12,460.96. Oil has rebounded 91 cents a barrel to trade near $84.15 as of this writing. Gold has seen risk-on trade take funds away resulting in a loss of $32.80 an ounce to settle at $1,589.90 today. The agricultural commodities have benefited from a weakening dollar and weather concerns.

Corn has rebounded from multi-month lows adding 37 cents to the July contract to settle at $5.93 today. Quickly drying top soil and a dryer than usual extended forecast, has allowed the market to build in a weather premium over the last several sessions. Monday’s crop condition ratings were left unchanged on the good-to-excellent ratings, however. The droughty conditions have continued to expand over central Illinois and Indiana. Export sales were reported as 251,800 MT for the ‘11/’12 marketing year.

Soybeans have been the leader to the upside this week and have tacked on 41 cents to the July contract to end trade Thursday at $13.84. Tight stocks and the likelihood of further revisions lower in next week’s USDA/WASDE have pushed this market to higher ground. Export sales continue to be well ahead of the pace needed to meet current estimates for the marketing year, adding to the bullishness. Export sales this week were reported as 220.200 MT, which is down 9% from last report.

Wheat has followed corn and soybeans higher and has gained 18 ¾ cents to settle at $6.37 ¼ on the July CBOT contract. Most of the pressure is to the downside for wheat, however. Harvest is reported as 20% complete as of last Monday with quality and yields being very good thus far. The spring wheat crop is off to a terrific start and was rated as 78% good-to-excellent in the most recent report. A new marketing year has begun and export sales were reported as 165,700 MT.

Dryer than normal conditions will be a driving force for the next couple of weeks across the Midwest. This has led the agricultural commodities to build in a weather premium. Adding to the bullish weather scenario is the weakening dollar index as of late. All of this comes just ahead of June’s USDA/WASDE Supply/Demand report set to be released on the 12th. Later this month, we received the Planted Acreage report and Quarterly Grain Stocks report.