Headlines:
- GRAIN PRICES RISE, THEN FALL, ON HEAT FORECAST
GRAIN MARKETS ARE TRADING WEATHER, AND LITTLE BUT WEATHER, AT THE MOMENT, AS TRADERS KEEP THEIR EYES GLUED TO THE WEATHER MODELS. “CURRENT WEATHER CONDITIONS FOR THE BULK OF THE CORN BELT ARE QUITE GOOD IN THE NEAR TERM,” NOTED BRIAN HENRY, AT BENSON QUINN COMMODITIES.
“THE KEY UNKNOWN IS THE FORECAST THAT EXTENDS THROUGH THE END OF THE MONTH.” THE MAIN TOPIC OF CONVERSATION IS A HIGH PRESSURE RIDGE, FORECAST TO APPEAR OVER THE US MIDWEST TOWARD THE END OF THE MONTH, BRINGING WITH IT HOT & DRY WEATHER FOR CORN AND SOYBEANS. BUT FORECASTS OUT TO THE 15-DAY PERIOD ARE HARDLY RELIABLE, AND WITH THE MAIN WEATHER MODELS IN DISAGREEMENT, MARKETS REMAIN JITTERY, DRIVING SOME SHARP SWINGS. GRAINS RALLIED OVERNIGHT, BUT FELL BACK WHEN THE MORNING BOUGHT A MORE BENIGN OUTLOOK, SUGGESTING THAT THE DREADED RIDGE WILL MOVE AWAY FROM THE ROW CROP HEARTLANDS SOONER THAN PREVIOUSLY THOUGHT.
Summary:
The news outlets purported that the “extreme heat and dry weather” forecasts was the reason for the rallies yesterday. Between today and yesterday there has been no change in the weather forecasts yet the grain and Soybean markets reversed course today with November Soybean ending the day as the biggest loser with a 42.25 cent loss. This is a classic case of outlets looking for reasons to explain movements in the markets each day instead of looking at the big picture. Outside of the fundamental narrative the main market movers is typically the managed money. Right now investors that are net long are probably not interested in watching their winning Soybean positions become losers while at the same time are not wanting to reveal an intent to sell for fear of potential front running of them liquidate.
So now the word from the outlets is that the trade does not believe that the heat will be enough to significantly damage the potential yield estimates. Today September and December Corn shed 5.75 and 6.75 cents. September and November Beans lost a whopping 38.25 and 42.25 cents respectively. September Wheat ended the day down 4.75 cents. All three markets were higher in early trading but Corn and Beans were particularly weak in that they finished near the lows of the day. Wheat finished at the bottom third of the trading day.
Crude Oil futures continue to respect our 44.70 key level and a close below it tomorrow would suggest a higher probability of reaching 40 within the next two weeks. Equity markets continue to make new all-time highs finishing higher again today.
