Corn watching ethanol tax credit; wheat battered by rain

Corn: Today featured a little macro-selling combined with fundamental weather forecasts that still look anything but threatening. There are a few key issues we need to look at in corn when looking ahead. First off, acreage is done being talked about as far as trade is concerned. Yes, there still is river flooding and a few more acres will be lost, but even if you consider a mile of corn acreage lost on each side of the Missouri river it still does not offset much in total production. Also remember that the USDA took 400,000 acres out of production to compensate for this issue anyway. Some talk was circulating about a vote in the Senate tomorrow in regards to the ending of ethanol tax credits as well as eliminating the import tariff on incoming ethanol. This vote actually will call to end discussion on the issue and force the real vote to occur. This is a long distance from Obama signing this new law obviously. Trade’s main focus will now be yield. Weather will be key along with good to excellent ratings in the coming weeks. It is now summer so all focus should turn to the forecasts. There still has been no change on that front as the general forecast continues to call for cool and wet. At the moment there are no real dryness or drought issues which speculators can use to justify suddenly making new contract highs. Longer term bulls need something to keep this rally going or will face a slow grind lower. Watch all issues but watch the weather most of all…Ryan Ettner

Soybeans: Beans fell again today after trading both sides early. Volume was the lightest we had seen in over a month. Funds were sellers of 4,000 contracts of beans, sold 1,000 contracts of bean oil and sold 1,000 contracts of meal. Crop progress was released after the closing bell and we are 87% planted as a nation. Last week we were 68% and the five-year average is 89%. With the good weather outlook over the next few weeks we are not concerned with the pace of the crop. Good to excellent ratings were released at 67%. That is better than the trade’s expectation of 62% and also than the five-year average at 65%. This is a bearish surprise and could see overnight trade start lower with this information…Steve Georgy

Wheat: Better weather in Europe had the wheat market under pressure today. Parts of Europe have been battling drought the past few months, but that trend seems to be reversing itself. According to our lead forecaster, Drew Lerner of World Weather Inc., dryness remains in the subsoil across a large part of Europe. Enough rain has fallen in the past week though to bolster soil moisture for improved spring and summer crop conditions. On the U.S. weather front, rain fell over the weekend across the wheat belt. This has mixed affect of the wheat market. In the far Southern Plains, the rain disrupted harvest activity. The few areas that still have wheat in the filling stage found the rain beneficial. The Northern Plains’ rain continued to hinder the planting of the spring wheat crop. Overall it seems the trade took the rain as more bearish than bullish today. According to a Reuters news story the Canadian wheat board announced that Western Canada’s farmers have planted just 86% of this year’s crop. This is way behind the 96% they normal have planted at this time of year. The Wheat Board reported that parts of Saskatchewan and Manitoba will probably not even get planted due to excessive moisture. On the export front Egypt’s main wheat buying agency, the General Authority of Supply Commodities announce a tender to buy an unspecified amount of wheat from the global market. This is their first bid to purchase grain on the open market since February…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. Rich Nelson is Director of Research 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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