The outside markets seem to have stabilized this morning with DOW futures up 129 as I write these words. Crude oil and the dollar are still a little lower while gold is higher once again.
August 9, 2011
By: Craig Haugaard, Grain Origination Manager
CORN: 1 higher
I usually don’t see much of my slow cousin Jimmy in the summer time as he stays pretty busy but he dropped by the house last night. For someone who, as best I can determine, has his investments diversified between beanie babies and baseball cards is pretty upset with the government. He kept railing against, “Those mowons in Washington that are scwewing our country up.” Hate to say it but he actually sounded pretty smart last night and it seems much of the world agrees with him as evidenced by the following CNBC headline: Dollar to Be 'Discarded' by World: China Rating Agency.
It seems much of the world has been caught by surprise at how fast things have changed and are hoping that we can turn it around. For today, however, it appears as if we may have some continued pressure from the outside markets. Of course, eventually we will get around to trading actual grain related news again. Yesterday after the close we had the weekly crop condition report and it contained some interesting stuff. It appears as if the hot weather has pushed the corn with 93% of the crop now silking which is exactly the same as the five year average. The crop condition slipped by 2% down to 60% good to excellent which was in line with expectations. This is now the worst rated crop for this poi9nt on the calendar since 2007. It is also interesting to look at the national condition index which stands at 98.3%, currently 6.7% lower than we were at this point last year when we ended up with a national average yield of 152.8 bu/acre. On Thursday the USDA will grace us with a report that will attempt to project the national average yield this year. Going into this report I continue to see a wide range of private analyst numbers so it will be interesting to see where the USDA lands.
I would remind you that, as I pointed out yesterday, for the last seven straight years the USDA number in August has come out higher than the average trade guess. For the next couple of sessions I suspect the market direction will be determined by outside markets and traders positioning up fir the report and then on Thursday we will swing open the gate once again and let her buck. Right now all three of my technical indicators are bearish.
SOYBEANS: 2 higher
Better August weather forecast coupled with the outside markets helped the bean market get beat like a piñata yesterday. After the close the weekly crop conditions report actually showed the bean rating improve by 1% to 61% good to excellent. That improvement coupled with what is perceived to be more than adequate stocks in South America will probably keep the market in check as we head into Thursday’s report. I hate to run the same chart two days in a row but in this case I am making an exception since, as you can see on the following chart, we hit the bottom of the recent trading ranges in last night’s session. A solid close below this support line could break us out of the sideways pattern and into a bear market. Technically, all three of my indicators continue to be bearish. .
WHEAT: 2 higher
Here is an interesting little factoid for you. The USA produces 4% of the HRW grown in the world in any given year. I guess it points out that wheat is truly a world crop. Having said that we still have a growing number of traders concerned that if the drought in the South West doesn’t break soon it will negatively impact the planting of HRW this fall. In fact right now the soils in Oklahoma and Texas are nearly 100% short of moisture while the rating in Kansas ranges from 66 – 70% short. The spring wheat crop was rated at 66% good to excellent in yesterdays report. That was down 4% from last week and well shy of the 82% good to excellent of last year. At the end of the day outside markets and the fact that world supplies are up will probably keep pressure on this market. With a sharp increase in the feeding of wheat expected look for wheat to take its direction from corn. Technically, all three of my indicators have now turned 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.