Corn: For many markets, Monday turned out to be quite volatile with corn being one of the few to hold strong all session. There was a slight pullback through the middle of the day but with some analysts trying to advertise a 153 yield, it was tough to pull corn lower.
Wheat and beans stayed very much on the defensive so corn bulls might want to temper their high expectations for this market. It is hard to imagine this market running past contract highs with both wheat and beans struggling to follow.
That being said, there was also more talk in the later pollinated corn of some missing kernels. From what we have heard so far, it was not the amount of moisture that appears to have made a large difference. It was the timing of the pollination. Corn that pollinated earlier appears to be OK while anything that was planted later is missing yield potential. We have seen some pollination issues in Minnesota and even a few here in Northern Illinois. There might be other areas that have the same issue, but it is still too early to tell.
Weather forecasts show improvements going into the end of this week. Monday’s noon weather run pushes the heat dome and high pressure ridge out of the Midwest by the end of the week. That is expected to return most areas back to “normal” August weather. While this is not likely to help corn yield very much, do not underestimate the ability for this to weigh on beans and in turn pull on the corn. Recent tough resistance has been found in the low 690s for December. Corn bulls have plenty of reasons to expect price to break 700 again, but they also need to hold back from looking at a fast run to 800…Ryan Ettner
Soybeans: Beans struggled to keep pace with corn and the outside markets, remaining under pressure almost all session. Crude and the dollar had influenced beans with crude falling well off the highs and the dollar jumping more than 40 cents. The “debt deal” is still the main issue that the trade will continue to watch and could have a huge market impact if nothing gets done.
The weather maps continue to leave rain in the forecast over the next few weeks and may impact any big rallies in the short term. The only change in fundamental news Monday was out of Brazil. They are looking at an increase of 0.04% in production, bringing them to 75.2 million tonnes. They are expecting to see yield slip a little as producers plant beans in less productive areas. This new number will top last year’s record of 74.9 million tonnes. They are also expecting planting acres to increase by 3.6% to 25 million hectares (61.8 million acres).
The trade was expecting to see conditions drop another 1% Monday as well. USDA indicated they fell 2%. The current 60% good to excellent rating is only 1% lower than the five year average. We feel the market has added this decline already and will focus on outside influence for the next few days. Fund money has been in control and could shift quickly…Steve Georgy
Wheat: Wheat continued being the follower of corn Monday. Friday, the wheat followed the corn lower and today it followed the corn higher. Right now it looks like the wheat market is using the corn market to determine its direction. With wheat trading near the value of corn, it is pricing itself as an alternative to corn in feed rations.
This is a good thing as we continue to struggle on the export side of the equation. U.S. wheat sales are running way behind their normal pace. Egypt’s last three purchases have all been filled by Russia with the U.S. and the rest of the world being left out on the business. As we have mentioned several times, Russia is selling wheat $25 to $50 a tonne cheaper than anyone else in attempt to build back their export market share.
Crop ratings released after the close showed 70% of the crop rated good to excellent down 4 points from last week and 12 points below last year at this time. As for the winter wheat, 81% of the crop has been harvested. For Tuesday wheat traders will be watching the direction of corn and the vote on the debt ceiling to determine their next move…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 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.