Corn: When the funds come in with active buying for just a short time on the opening, it is cleanup buying, which is commonly a sign that they are done for a while. This would typically mean that you can expect them to be calm for at least a couple weeks, but with the dollar continuing to drift lower, it is possible it would only be a few days. Either way, it offered the speculators a chance to get active with selling the old crop corn while the new crop slowly drifted lower on an improved forecast.
Monday's noon weather run took rain out of the forecast for later this week. It still calls for rains Thursday and Saturday but significantly reduced the amounts. Most important, the forecast was drier for the wettest areas of Missouri, Southern Illinois and Southern Indiana.
Spreaders and speculators made old-crop corn move violently Monday, but if we keep our forecast on December, it was a fitting move for the new forecast. This now suggests that planters should be out and going right now with more expected mid to late next week. Try not to get caught up in the old-crop speculation and focus on new-crop direction.
Right now the December chart does not look bad but could stumble quickly with each additional planter that is out in the field. Lastly, in regard to the funds, we have not seen them significantly long for 12 straight months in this market. They started actively buying this corn in July of last year…Ryan Ettner
Soybeans: Beans traded more than a 20 cent range Monday but closed only a penny lower for the session. Funds were sellers of 1,000 contracts and there were less than 66,000 contracts traded for the day in July. This shows the lack of news but could continue to get pushed around with corn and wheat. We were able to see July beans push above 1400 again, but the contract wasn’t able to close above it. The long-term trend is higher, and if we don’t see a push above resistance Tuesday, we could retest the 1340 as support.
I am still expecting beans to be a follower as we move through the next few weeks. If corn and wheat go lower, beans will follow. If they go higher, beans will follow. The outside markets haven’t been much of an influence lately, but we are seeing the energies, metals and the financial markets selling off as they close today. That could get beans on the defensive early tonight. The dollar is finding strength right now as well…Steve Georgy
Wheat: Wheat sold off Monday in sympathy with the corn market. With the planting window opening up, funds were sellers of the corn and that pressured that market. Also adding to the negative pressure to the market was having rain fall in parts of Oklahoma and Texas overnight. The biggest question coming into Monday’s trade was whether the cold temperatures in the plains these past three mornings hurt the crop or not.
According to our lead meteorologist Drew Lerner, most of the lowest temperatures were not cold enough in areas where crops are most advanced to causes permanent damage. Most of the impacted wheat areas are in the joint stage so it was be able to handle the cold. More cold is on the way, so the situation will need to be monitored.
Demand wise, Lebanon is tendering 50,000 tonnes of wheat and South Korea purchased 275,000 tonnes over the weekend. The weekly crop ratings were released after the close today. They showed that 41% of the crop is rated very poor to poor. While only 34% of the crop is rated good to excellent. The spring wheat planting continues to drag; only 10% of the crop is planted compared to the five-year average of 43%. Last year at this time we had 57% of the crop planted by this date. North Dakota has only 1% of their crop in the ground. They normally have 32% planted by now. Minnesota is 3% planted vs. 41% average while Montana is only 7% planted compared to 46% average. These planting delays should be viewed bullish for the Minneapolis Grain Exchanges spring wheat contract…Jim McCormick
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 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.