Pre-opening Grain Comments
July 26, 2011
By: Craig Haugaard, Grain Origination Manager
CORN: 3 higher
Yesterday we had weather forecasts that showed lower temperatures and more rain so we beat the snot out of this market. After the close we had the crop conditions report which took the market by surprise when it showed a 4% decline in the rating from the previous week. The crop is now rated as 62% good to excellent, down 4% for the week and well behind the 72% good to excellent of last year on this week. Of course that 72% eventually translated into a 152.8 bu/acre national average yield so I expect this market to remain as nervous as a long tailed cat in a room full of rocking chars. Weekly export sales were down from last year but with the USDA projecting that we will end up with 6% less exports than last year this does not qualify as a surprise. Thus far exports are running 4% behind last year. Some in the trade think that the price break we have seen will bring Chinese buying into the market but thus far there are no signs of that occurring. From a technical standpoint, two of my three indicators are bearish as this market continues to flounder around looking for some fresh news to move it significantly one way or the other.
SOYBEANS: 8 higher
The cooler and wetter forecast was a slap in the face to the bean bulls and we saw bearish pressure enter this market yesterday. After the close the crop conditions report showed the crop slipping 2% for the week, down to 62% good to excellent. A year ago the crop was rated 67% good to excellent at this point in time. This is still a market in which we are dealing with a very tight carry-out and thus could have violent reactions to any changes in production. For the time being this market continues to look as if it is range bound, albeit in a pretty large range. Two of my three indicators are bearish but as long as we stay in the range as defined by the red lines on the following November futures chart I am having a hard time getting excited about anything. Having said that, at some point we will break out of this trading range and when we do so I predict that the market moves either sharply up or sharply down for a bit.
WHEAT: 2 higher
Wheat followed corn lower yesterday. The only fresh news that we may have to talk about in this market is the spring wheat tour which starts this week. Unfortunately, because of the late planting this year the tour participants will only be counting wheat plants rather than the heads. There seems to be a general fear out there that we may see disappointing HRS yields this year and we continue to hear reports of HRW being less than expected. The crop conditions report yesterday actually had the HRS crop improving by 1% up to 74% good to excellent. While this is good, a year ago the condition stood at 83% good to excellent. Technically not much has changed with two of my three indicators being bullish for both HRW and HRS.