Longer-term factors carry weight in grains

Corn: It was a calm trade in corn Monday as once again funds took the day off and corn was short on daily news. Longer-term factors are still in place, which involve exports running slower than expectations while ethanol usage runs above expectations.

Russia was rumored to be working out a deal with Argentina to secure corn from them, and that raises questions as to the true supply of corn that Russia has. When one country starts buying from a new source, it brings up the next obvious questions. Why are you looking to buy from a new source so eagerly, and just how low on stocks are you? Right now we have to call those questions speculation and only good for moderate support.

Once again, we do talk about the dollar often but also realize when funds are not trading then the dollar will mean nothing to grain trade. Any short-term breaks in the dollar should not be counted on for large bounces. If dollar rallies do not cause sell offs, then bounces should not be expected to cause rallies…Ryan Ettner

Soybeans: News that China will sell 300,000 tonnes of soybeans to its domestic crushers on Thursday night still acts as an overhang here. Being realistic, these old crop soybeans that were still in government warehouses may not be enthusiastically purchased due to quality concerns. The key issue to the trade is the sale, though. We do not expect much upside potential this week due to that overhang…Rich Nelson

Wheat: Weather talk dominated Monday's trade. North America, South America and Australia all seem to be having some type of weather event. The U.S. soft red winter wheat is finally getting some much needed rain. The far western hard red wheat still does not have any rain in the forecast. The western wheat areas are running out of time that rains will help their crop before it moves into dormancy. Australia is trying to harvest its wheat, but they are getting too much rain. This rain has traders concerned about yields as well as quality of the crop. Argentina’s Rosario Grain Exchange has estimated its current wheat harvest at 10-11.5 mmt while the USDA has Argentina’s wheat crop pegged at 13.5 mmt…Jim McCormick

Ryan Ettner is a registered commodities broker and grains analyst at Allendale, Inc. Rich Nelson is Director of Research at Allendale. Jim McCormick is a Sr. Broker at Allendale, Inc. Allendale is registered with the CFTC and NFA and is a member of the NIBA. www.allendale-inc.com.

About the Author

Ryan Ettner is a registered commodities broker and grains analyst at Allendale, Inc. Steve Georgy is a Sr. Broker/Manager at Allendale, Inc. Jim McCormick is Senior Broker/Manager at Allendale, Inc. Allendale is registered with the CFTC and NFA and is a member of the NIBA. www.allendale-inc.com

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