It was this day in 1972 that gold hit $70/once for the first time.  Things have certainly changed since those days.

August 2, 2011
By: Craig Haugaard, Grain Origination Manager

CORN: 2 lower

The market surged higher on Monday as traders reflected on the ongoing hot temperatures.  Also aiding the rally was the hope that the budget mess was soon to be rectified as well as the normal first of the month buying.  After the close we had the weekly crop conditions report and the trade had to be surprised by it.  The traders that I spoke with yesterday were of the opinion that we would see the crop conditions slip by 1 – 2% so when the report came out unchanged there were more than a few heads that shook in disbelief.  The general consensus seems to be that the high night time temperatures are taking bushels off this crop and for some reason that wasn’t reflected in yesterday’s report.  I heard numbers bandied about to support this position such as, the last two weeks in Omaha had a average low of 76 degrees while the normal average low is 66.5 degrees.  Never-the-less the unchanged numbers caused the market to feel some pressure during the night session and that may carry over into today’s session as well.  This week we will have a number of private analysts release their yield projections with FC Stone kicking it off today and Informa weighing in later in the week. 

SOYBEANS: 2 higher

This is a weather game plan and simple.  The market traded higher on fears of continued hot weather and the damage that it could do as this crop reaches its most crucial time of year.  This fear was re-enforced after the close when the weekly crop conditions report showed the crop dropping 2% for the week to a level of 60% good to excellent.  This is the worst rating we have had for this week since 2007.  It won’t take much of a reduction to push us into near record tightness in the 2011/12 carry-out and thus this should remain a potentially volatile market.  Lest you think it is all sunshine and lollipops I should point out that Chinese buying has slowed to the point where it is assumed that the USDA will decrease their projected export number in the upcoming
S & D report.  Technically, all three of my indicators are now bearish and as I have said many times recently it appears as if this market is in a trading range.

WHEAT: 2 lower

The best thing that wheat might have going for it is the fact that the funds are short 41,000 contracts of Chicago wheat futures.  Should they decide to liquidate their positions it should be helpful to wheat prices.  The corn/wheat spread should also be helpful as it would seem to promote the feeding of wheat this year.  Exports may remain a struggle as Russia and the Ukraine appear to have larger crops than what had been anticipated. Heck, even Iran is making noise about being a wheat exporter this year.  The following chart is the spread between nearby Chicago corn and Chicago wheat futures.  As you can see we are at a level that is historically rare and should encourage the feeding of wheat.  Technically, two of my three indicators are now bearish.

The information contained above was taken from sources which Wheat Growers believe to be reliable, but is not guaranteed by Wheat Growers as to accuracy or completeness and is made available for information purposes only.  There is a risk of loss when trading commodity futures and options.