More rice, more problems

Futures were lower as the U.S. dollar moved higher again. Export demand has been very good so far this year, but ideas are that the new rally attempt in the U.S. dollar could hurt further demand potential. There is still plenty of rice in the United States, so traders and exporters are willing to sell either way, but farmers are still not willing to sell much as prices remain below costs.

Many producers say that rice is getting planted, but the emergence has brought new problems as most crops have seen too much water and look unhealthy. There is a good chance that some normal rice production will be lost this year because of all the rains in the last couple of months. Asian prices are steady today.

Overnight News:  Some showers appear are expected through the weekend. Temperatures will average near normal.      

Chart Analysis:  Trends are mixed. Support is at 950, 925, and 912 July, with resistance at 986, 991, and 1002 July.
 

Wheat

Futures moved lower for much of the day yesterday, but nearby months in Chicago and all months in Kansas City and Minneapolis were higher by the close. This market remains a weather market, with fears of production and quality losses in the central and southern Great Plains and Midwest providing price support. Current forecasts call for a lot of rain to the south, and some quality could be damaged. It has been a very wet year now that the drought has been broken in the central and southern Great Plains and there are worries that too much protein will get lost.

Quality could be a real problem in the wet areas as the protein slips. However, it is unlikely that much, if any, yield potential has been harvested except in northern areas. U.S. wheat remains relatively high priced in world markets, so it is likely that the current rally will run out of steam once the fund buying stops, and that could be as soon as today.

Overnight News:  The southern Great Plains should see daily chances for scattered showers and storms. Temperatures should average near to below normal. Northern areas should get mostly dry conditions today, but showers over the weekend temperatures should average near to below normal. The Canadian Prairies should see dry conditions. Temperatures will average near to above normal.

Chart Analysis: Trends in Chicago are mixed to up with objectives of 546 July. Support is at 503, 491, and 488 July, with resistance at 530, 534, and 543 July. Trends in Kansas City are mixed to up with objetives of 568 July. Support is at 535, 527, and 518 July, with resistance at 563, 575, and 584 July.  Trends in Minneapolis are mixed to up with objectives of 589 July. Support is at 558, 553, and 546 July, and resistance is at 581, 588, and 594 July.

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About the Author

Jack Scoville is a veteran futures market analyst specializing in grains, softs, rice, oilseeds, and tropical products such as coffee and sugar.