Corn: More rain fell over the weekend than was expected, which started off this market with selling on Monday. Back that up with an unchanged to slightly bearish forecast at noon, and there were reasons to see some sellers move into this market.
Late support came into the day session as traders looked for a 2% to 4% decrease in the good to excellent rating Monday afternoon. This continues a trend of maps looking slightly bearish, which has been occurring for over a week. There is little reason for trade to assume a bullish weather forecast until it sees one now.
There are plenty of willing buyers in this market, which means any change that adds heat or removes rain will quickly be bought. Just as we were doing last week, trade is reacting to each weather forecast update. We can expect this to continue throughout this week and also expect that condition ratings should moderate after this week as well.
Bulls certainly saw what they were looking for with a 4% drop in the GTE ratings and will now start to advertise low yield estimates based on that number. Bears will say that it is common sense to expect this drop during last week’s heat and will have to reply on continued improving weather forecasts…Ryan Ettner
Soybeans: Beans are still watching the weather maps closely. The extended forecast is cooler with increased rain in the 6- to 10-day period, but less rain in the 11- to 16-day period. Traders sold beans Monday as they focused on weather.
Funds were sellers of an estimated 6,000 contracts. This was just the third day of selling since July 1. This decrease in positions on Monday should put them long about 121,400 contracts. This is still a sizable position and could find beans back off more if they continue to lighten up at the end of the month.
The charts have been in a big sideways range with the upper end tested late last week. This is the last week of the month and funds typically even up positions. That usually means we could find some profit-taking early this week. Weather will still be the main focus so keep an eye on the maps…Steve Georgy
Wheat: The wheat market began the week under some pressure in the overnight session as the debt ceiling talks between Congress and the president fell through. This turn of events provided the trade with a risk off mentality.
Wheat also followed corn’s path lower as the weather Sunday evening did not seem as threatening as when the trade departed for the weekend. Wheat finished a bit firmer toward the end of the session as it looked like the trade was covering some shorts.
Monday's move can also be attributed to the corn/wheat spread, September wheat closing at a 9 3/4 cent premium to the corn. Rumor of more feedlots turning to wheat instead of corn should keep the spreaders on their toes and should help support these markets at least until we have a better idea of what the corn crop looks like.
Pressure in this market should come from international exports in the Black Sea region where exporters are working hard to regain market share lost after last year’s drought. Funds sold an estimated 3,000 contracts Monday but are long 14,000 for the month. Spring wheat ratings came in at 74% GTE, which was 1% better than last week.
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.