EHedger Afternoon Grain Commentary 6/4/12
Jun 04, 2012
Corn and wheat closed sharply higher today after a huge outside-down day on Friday. July corn closed 16 ½ cents higher at $5.68, July soybeans 4 ¼ cents lower at $13.40, and July wheat 15 ½ cents higher at $6.27 ¾.
Export inspections were all in line with market expectations this morning except for soybeans which were slightly above the guesses. The outside markets were mixed with lower equities and a lower US Dollar. The grain market rally was associated with a drier forecast, firmer cash corn basis, as well as the fear of lowered crop conditions on the 3pm ratings report.
The crop conditions ended up improving slightly for corn with 2 percent moving from a good rating up to an excellent rating. The Reuters poll was calling for a 1 percent drop from the good-excellent categories, so this may be slightly negative for corn’s price action tonight on the re-open. The first rating for soybeans came in at 65% good-excellent when the poll was estimating 69%. Winter wheat is 20% harvested which is much faster than the 5 year average pace of 3%.
The main driving force for grains is still the weather. Changes to the morning and midday models will continue to have large impacts on the prices. We also have Fed Chairman Ben Bernanke speaking to Congress on Thursday and many are projecting another round of quantitative easing coming up soon. If this is announced, or even just the fear of this being announced, we could see another drop in the dollar and a financial push back into "hard assets" like gold or other commodities. If you need to catch up on sales having scale up orders in is not a bad way to get positioned in case we see a rally. We have found heavy resistance in December corn at the 50 and 100 day moving averages over the past 6-8 months. Currently the 50 day moving average is at $5.32 and the 100 day is up at $5.48 ¾. These may be good target levels to have orders placed.
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Chart: December corn (red – 50day, blue – 100day)
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