Geopolitical June News

US / North Korea summit was reported as constructive as Kim Jong Un has committed to denuclearization, but did not specifically define what that will look like. President Trump would like to discuss similar terms with Iran. Threats that an attack on a critical port city in Yemen could further limit humanitarian aid to the war- torn nation. Middle East conflicts continue to pose a threat to oil movements and will maintain a premium that props up Brent for the foreseeable future.
Trade wars are seldom a good thing for prices in the near term. Trump seems content to call the bluff regarding China, NAFTA and the EU. That process may take a while to play out. While this may be beneficial to the ag trade somewhere down the road, it keeps bulls sidelined for now. Bounce back buying this morning may be classic “sell the rumor/buy the fact” action, but suspect upside remains limited against backdrop of favorable weather and as yet unknown specifics of PRC’s response. The latest 6-10 and 8-14 day outlooks continue with a warm and wet forecast for most of the growing areas from June 20-28. Monday’s crop condition ratings are expected to hold near record highs for this point in the season. It’s a tough spot for US agriculture near term if a US/China trade war erupts. But USDA projections show falling global supplies of soybeans, corn and wheat – gluts of which have weighed down prices in recent years. Global trade may have it’s spits and starts, but commerce will continue as, both people, and animals, need to eat. With most of the bearish news factored in, technical indicators oversold, and COT data tonight likely to show most of the remaining fund length cleansed from the market, we’d not suggest throwing in the towel here.