Corn: New month, new money. Who else can run these markets this much higher this fast? In the last few trading sessions grains have not followed outside markets nearly as much as they had. Today the funds sure threw us a curveball when they bought grains very aggressively without the dollar falling off. It was a new month and right now it looks like new money flow came in and fast. If that is the story of the day then we would not expect large follow through tomorrow. On Friday the market was given a bearish forecast which called for as many as 16 days of drier weather with only occasional light rains. It was mentioned that if we saw the same forecast after the weekend it would be viewed as bearish and that is exactly the forecast we saw this morning. Only light rains off and on during the next two weeks are what the corn market is looking at. So how did corn manage to stay higher before the funds bought on the close? At first the dollar was offering the support trading 30 cents lower and the small specs were still following outsides. Many producers we talked with stayed in the corn last week and early this week instead of taking a shot at the beans. Reports still hold in with what we have heard for a while now. Amazing yields, low test weights, high moisture and now talk of mold in the corn. Some areas of SD, MN and ND are talking of holding off on harvesting corn for now. There have not been many reports of lodging so some to the north now feel it is worth waiting. With the moisture levels, we are hearing it may not be a matter of opinion when to harvest the corn anyway. Even with a great forecast, corn will only be harvested as fast as it can be dried which is not fast at all. We will have to wait and see if the end of session buying appears once again tomorrow or if it was just a new month and money needed to be put somewhere with grains being the target this afternoon. If we see another round of buying tomorrow then fundamentals will have to take a back seat again but if we don’t find fund buying we might not want to give up on fundamentals yet.
Soybeans: Once again it was the bean market that looked to be the leader today. Early support was seen and was expected due to the rains in the Delta. Bushels of damage and losses can only be estimated as of now and until we see some solid numbers there should still be an amount of expected support. Beans had a sideways range to trade in and that is what we saw until the end of the day where the fund buying came in. During most of the day it looked as though the beans were supporting other markets and if more fund buying is not found tomorrow this may still be the market with the most support behind it. Obviously producers should be getting a large number of beans out during our two week window. That will provide the resistance while the Delta provides the support. For these reasons there is little reason to expect beans to trade much above 10 or below 959. That is of course if the grains go back to the fundamentals. As shown countless times before if these funds are back to being active buyers tomorrow we may want to place fundamentals in the back seat again and look for more technical indicators for direction.
Wheat: As a percentage, wheat was once again the largest mover. There is no question at all it is the market the funds move the most. Certainly there was no fundamental change that warranted the move on the close. Just like the other grains, today helped to secure the right shoulder of a head and shoulders formation which would suggest a sell if the market can fail soon. If funds are not in this market tomorrow expect some following of row crops and profit taking.
Ryan Ettner is a registered broker and grain analyst at Allendale, Inc. in McHenry, IL. Allendale is registered with the CFTC and NFA and is a member of the NIBA. www.allendale-inc.com
