Corn: Monday's price action came down to being as simple as China not raising interest rates over the weekend. Non-fund speculators started to build long positions early last week just to get out of them for the second half of the week on the interest rate talk. That left many of these speculators flat over the weekend. Once the day session rolled around Monday morning and China left rates alone, it was a green light to get right back into speculative longs. One important thing to note is that Monday did not “feel” like it was fund buying. In fact, data show recent buying has been smaller speculators and not the funds…Ryan Ettner
Soybeans: China’s report on inflation, now at 28-month highs, was seen as bullish for U.S. commodities. The Chinese government has yet to act on this inflation problem with its threat of dropping the big interest rate bomb. Though reserve requirements for banks have been increased, they have not changed short-term interest rates. This leads some traders to wonder if China has finally realized it cannot control food prices. If China will not act, then the price ceiling just got raised. Year to date, China has purchased 70% of U.S. soybeans exports and 31% of U.S. soyoil exports…Rich Nelson
Wheat: The wheat trade was pretty subdued compared to the rest of the markets on Monday. After surging higher the past few weeks, the wheat bull move seems to be stalling out. It might just consolidate here as we move the end of the year.
With the rest of the grain markets rallying and the U.S. dollar breaking, we should find good support under the market. Monday's trade looked to be dominated by corn vs. wheat and old crop vs. new crop spread unwinding.
The market did find some bearish news out of Australia. It looks like the country finally will get some dry weather that will allow farmers to get back into the field and back to harvesting.
On the bullish side of the weather, the far western United States hard wheat areas continue to miss out on the moisture and have large swings in temperatures. The CFTC report on Friday showed the large speculators cut their net short position by 30,339 contracts. This is bullish the market…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.
