The Grains Review
For the week of August 15, 2011

By Matthew Pierce

Friday saw a quiet session with markets chopping higher without conviction heading not the weekend. The outside world keeps things in check yet another day. Corn made new highs only to fade off into the close, beans chopped in the established range not moving against the 100-day MA, meal failed miserably against the 200-day MA, bean oil gained but did not make new weekly highs and wheat held the 50-day MA in a weak overall effort. The trade was subdued with fundamentals quiet heading into the weekend and all eyes remaining on Europe and Asia for support with the US equities trying to hold ground. On the weather side it was expected to be cool and wet across the central part of the US with most thinking the forecast benign. The question now is how much damage was done to the corn and what happens now if we lose GDD days to cool weather?

Heading through the weekend traders saw the COT show a massive exit of long positions in corn, beans and oil with wheat and meal remaining the ugly step children. The exit in beans was a bit of a surprise but it offers even more potential to the recovery with beans yield a major question mark moving forward. I can tell you that driving through N. IN again I saw corn looking very spotty with fungus evident on a few “samples” I borrowed from producers. Beans were a mess with some pods looking good with evidence of three beans while others were shriveled with weak looking beans inside maxing at 2.

Heading into the week ahead markets have nothing overly exciting from the fundamental side with no reports of consequence outside the traditional crop progress today and exports on Thursday. Traders will see more and more private forecasters try to peg corn and bean yield with the numbers dropping closer to 150 for corn and 41 for beans. Weather is not threatening this week but with heat and dryness persisting west of the Mississippi corn and beans remain an issue. Spring wheat will actually see a break in rains which could help harvest there with the trade eagerly waiting to see what the quality is with early cut wheat in SD missing the mark by a wide margin. Heading into the day session today the trade has modest strength from a higher overnight with European and Asian markets helping the modest bullish sentiment. There is nothing fresh from demand with consumption getting a push in the right direction this morning from NOPA coming out at 122.9 million bushels versus expectations of 118.5. Couple this to the recent surge in demand from China and we have a modest problem on our hands for beans. This was articulated on Friday’s expiration with beans leaving 10+ over the Sep. I will look for beans to lead any momentum today with wheat in second while corn looks for buying to help break and close above contract highs. The sentiment across the board is with bulls so look higher this with one massive caveat. If outside markets tank again grains will inevitably tank as well. Fundamentals are bullish but worthless unless macros offer support or at the least do not collapse.

Source: Pitguru.com