Corn: It was predictable to find a bounce in the corn market based on the news over the weekend of flooding more acres. Obviously, no one really knows how many of the flooded acres were corn producing, but this was bullish old crop news. With most of the wet weather being in the south, early corn harvesting areas are still the ones impacted the most. The flooding will continue to suggest that areas able to get early September harvest will be very limited.
Now let’s take Monday's trade on a larger scale and look at the July corn chart. Even though July ended on a strong note, the near-term downtrend line was still not taken out. With that line crossing Monday around 715, it is quite possible that old crop will be through it as early as tomorrow so give that market just one more day before jumping on the bullish bandwagon. December corn is slightly different with the downtrend line around 655. This gives the new crop more room to the upside before breaking out.
Once again, there is no argument with the bullish news seen Monday, we simply want to avoid the 20 cent higher days that are followed by near limit down the next day. There will be time to turn bullish when each proper line is taken out. Trade went through the day expecting a planting number around the 60% level. Whether it is good or bad, 20+ cent moves in this market are becoming more common and we should look at longer-term outlooks rather than get caught up in single day excitement…Ryan Ettner
Soybeans: Beans broke late in the session Monday after most of the markets sold off. Corn and wheat tried to hold beans higher but were unsuccessful as crude slipped more than $2. Monday's soy crush numbers from NOPA were negative as well. April crush was reported at 121.330 million bushels and below the average guess of 133.19. That is 6.5 million less than the trade expectation. It will be hard to buy this market with bearish numbers like these.
Traders are also looking at the potential acreage to shift from corn to beans as weather and flooding remain a concern. We are going to continue to watch the energies and the dollar as an indicator for direction over the next few weeks. Most of the fundamentals are out the window right now as money flow takes center stage. If the dollar can push higher we may have more downside before the summer rally…Steve Georgy
Wheat: Monday trade was all about weather and weakness in the U.S. dollar. The market surged to the day’s highs early in the trade. At one time, the July Chicago contract traded 20 cents higher on the day. It settled 7 1/4 higher on the session. Outside weakness in the energy markets seemed to put pressure on the wheat pit late in the session.
The trade is still concerned about persistent dryness in the hard red wheat region of Texas, Oklahoma, Western Kansas and Eastern Colorado and how it may affect yields. The trade is putting some weather premium back into the soft wheat market. A bulk of this wheat variety is grown in the Ohio River Valley and the Mississippi Valley. This part of the country has had 8+ inches above normal rainfall over the past 30 days. This has lead to lowering of yield potential due to disease and flood losses. Monday night's crop ratings showed that 44% of the winter wheat crop is now rated very poor to poor, while only 32% of the crop is rated good to excellent. The Northern Plains spring wheat planting continues to lag. Monday's planting progress report showed that 36% of the crop has been planted, still way behind the average for this time of year which is normally at 76%. This should be viewed friendly for the Minneapolis wheat contracts. The delayed planting looks like it has the millers nervous as the spring wheat cash basis at record highs.
A Reuters news story stated that cash traders are paying as much as $14.30 a bushel for spring wheat. According to the Canadian Wheat Board, the farmers in the Western Provence of Albert have 20% of their crop in. This is up from 4% last week. Farmers in areas of Eastern Saskatchewan, South Central, and South Eastern Manitoba have just started to plant. Most areas of these regions will need at least one more week of dry weather before they can start planting. Europe missed out on expected rains over the weekend and that has traders concerned about their crop potential…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.