CORN: 5 higher
Chinese rumors continue to swirl like a whirling dervish around this market. Thus far the rumors seem to be larger than what underlying activity by unknown purchasers would seem to bear out. The fact remains that until the trade has a better handle on what the Chinese have done and/or are going to do the recent lows may act as a floor for this market. As we look towards next week’s USDA report I should note that one private analyst that I spoke with yesterday is projecting that the old crop carry-out will be raised to 960 million bushels. If that proves to be the case it would be viewed as negative. Longer term, the weather will be key. As long as the weather is fairly benign in the Corn Belt and China doesn’t go crazy there will be a tendency for this market to work lower. We made a good run at filling the gap left last week and if we fail to do so eventually we will go the other way and test the lows. By harvest time, barring a surprise in either acreage or yield we could see the December futures trading closer to $5.00 than $6.00. Two of my three technical indicators remain bearish.
SOYBEANS: 5 higher
The action in the bean pit yesterday was about as exciting as kissing your sister. (On a side note that saying is believed to have first been uttered in 1953 by the Navy football coach, Eddie Erdelatz, after tying with Duke and in fact has nothing to do with the desirability of kissing your sister.) At the end of the day we are facing what would appear to be a tight 2011/12 carry-out and the trade is going to be a little reluctant to aggressively sell this market until the yield prospects are a little better defined. One factor that is expected to swell the carry-out a little bit is the expected increase in the 2010/11 carry-out as a result of slowing exports. Most of the trade expects that to be reflected in the July 12 report. On the other hand a weather scare could threaten yields and spike November bean futures to the $14 level. At the present time two of my three indicators are bullish and I expect this market to perform better than corn or wheat.
WHEAT: HRS 5 lower HRW 9 lower
We are keeping an eye on a potentially developing drought in Australia and reports of excess rain hampering harvest in Ukraine. Toss in the acre re-survey going on in the Dakotas and Montana and you may be able to generate a little support for this market at some point. On the other hand we have cheap Russian wheat to compete with and that will help weigh down our wheat market. It is having an impact overseas as well with the Paris Milling Wheat market down $0.22 last night on pressure from the Black Sea wheat. My technicals are still looking more bearish than bullish and frankly looking at the continuation chart for Minneapolis wheat futures you have had far more opportunities in your life to sell wheat lower than this level than you have to sell it higher.
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