Corn: Corn was given a forecast that showed a slight slowing down of the heat this weekend, which caused a sudden selloff. While a small decrease in heat seems to not justify double digit losses, it might make more sense when we see that heat in the forecast first caused over a $1 rally. This is another good example where seeing a corn chart would have made the morning’s setback appear small in comparison to the rally.
To help put things in perspective, a move down to 650 in December would still be just a 38% retracement. Bulls defended the market well as they have plenty of factors to keep support in corn. While trade was looking for a 1% decline in crop ratings today, USDA found an even larger 3% drop. Good to excellent ratings are now at 66%, the five year average…Ryan Ettner
Soybeans: Beans closed strong Monday after opening weaker as weather maps backed off on some of the heat toward the end of the week. Weather will still be the main focus as we start to look at the long range maps extending into August. Corn will still be the leader right now but it seems buying interest continues to build under the bean market.
The charts are still in a big sideways range and the November contract is toward the upper end. With the fundamentals and technicals friendly, the funds seem to continue to build a position. Monday was the first session the funds have sold beans since July 1. With that said, they only sold 2,000 contracts today and managed to keep the November futures only 3/4 of a cent lower. We feel beans are still friendly but we are looking to buy a put just in case we see rain in the long range forecast.
We would also have a huge number of bushels booked for this year. Sales have been pretty good for new crop beans. Recent old crop sales haven’t been the best, but new crop bookings this year are at record levels. Conditions were released and beans dropped 2% from last week. This should have had beans stronger overnight. Good to excellent ratings are now at 64%. We feel the recent high of 1411 could be tested this week if the outside markets can hold up…Steve Georgy
Wheat: The wheat market ended Monday a little weaker in a lackluster trading session. A higher dollar and lower corn market were the biggest culprits for the pressure. The dollar was higher on renewed debt concerns in Europe. The EU has scheduled an emergency meeting to discuss further bailouts for Italy and Greece. This had traders selling the euro and buying the dollar. The higher dollar makes the United States less competitive on the export front. This is not what we need right now as we are pricing our wheat $50 a tonne higher than where Russia is selling. Other countries, in the same boat, have a $25 to $50 per tonne premium. Egypt who usually is a good customer of the United States has bought all of their last two purchases from Russia.
The debt ceiling limit negations are also having an impact on the market. The longer it takes for Congress to cut a deal, the more risk of mentality will enter the market.
Export inspections out Monday, showed that we shipped out 18.73 million bushels of wheat last week. This was below the trade estimated range of 21 to 25 million bushels. Crop ratings released after the close showed that 73% of the crop is rated good to excellent. This is unchanged from last week…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.
