Morning Market Insight
July 25th, 2012
Drew Johnson
Grain Marketing Specialist

Corn
As of 7:40am Old crop up 9 New crop up 10

Yesterday there was some more general selling  in the markets, with corn touching limit down on the Sep futures, but not on the Dec, and then bouncing back. News out there still has the funds a little nervous. Faced with the anxiety of forecasted rain, European economic problems, and our own slow economy, the funds, who are sitting on a long position, could not help but capitalize on the news. On the other hand corn continues to deteriorate with 45% of the nation’s crop condition rated poor to very poor with yields forecasted at about 121.5 for an average. Corn’s Crop Condition Index, which measures the crop condition from 0 – 500, 500 being excellent and 0 being very poor, right now is at 263, 18 points below last week and about 100 points below the average for this time of year. The interesting part about this is that the condition index, present day, is one point below where we were at this time in 1988. The corn market today is rebounding with resistance at $8.00, for new crop corn and $8.25 for old crop.

Soybeans
As of 7:40am Old crop up 28 New crop up 26

With soybeans, the story is much the same. Traders believe  that if the rain forecasted amounts to anything will save the soybean crop. In the recent condition report we find that this little plant too is succumbing to the heat. National average has soybeans at 35% poor to very poor. Missouri alone takes the cake where their soybean crop is projected at 68% poor to very poor, but even with that news we still saw some selling. The chart below is the NOV futures comparing the drought years of ’83, ’88 and 2012. It paints an interesting picture of what we could possibly be seeing heading into the fall. As for today, look to see funds try to figure out the weather forecast. Resistance at $17.00 new crop and $17.50 on old crop.
 

Nov. Soybean Drought Chart

Wheat
As of 0:00am Spr. Wheat up 15 Win. Wheat up 17

Wheat, wheat, wheat, wheat, wheat. What to say. All though wheat fundamentals are strengthening it has to follow corn as a feed grain. There is more of it so it has to remain comparable. Right now if corn goes down so does wheat. Interesting note, the annual industry crop tour, that started yesterday, has found some of the spring wheat has deteriorated, however it is still too early to tell the significance of their findings. There is support at $9.15 futures with some resistance at $10.00.