Grain Markets Following Potential Rain

June 15, 2012 01:12 PM
 

 

This information is provided by Scott Harms of Archer Financial Services, Inc., 800-933-3996.
 
 
It was a choppy week in the grains this week as the market digested ever changing weather forecasts, the European debt situation and a USDA Report
 
In what seemed as a dress rehearsal for the releasing of government reports during the markets’ trading hours, little new information was released on Tuesday.  There were some big swings in the market upon its release, but nowhere near the volatility that we will experience on June 29 as the USDA releases it updated acreage and stocks data. 
 
USDA left its corn carryover estimates unchanged this week, only shifting some demand within the balance sheet. The soybean balance sheet was tightened on Tuesday, however, for the second straight month it was followed with disappointing price action. 
 
The theme of the week appeared to be a reduction of position size as great uncertainty surrounds where beneficial rains may fall next week. In addition, concerns about Sunday’s elections in Greece has caused the July soybeans to endure some aggressive liquidation this week. The funds still hold a sizeable long position in the soybean market. 
 
Next week will begin with a close examination of where the rain has fallen or where it is expected to fall through mid-week. Additionally, the trade will be monitoring Tuesday’s Fed announcement for any policy changes. At present, it appears that the forecasted rain will be shy of what is necessary to relieve crop stress East of the Mississippi River.
 
Next week should also begin the flood of lower production estimates from private analysts due to growing stress on this year’s crop. This should keep new crop corn and soybeans well supported. If the rain totals are less than expected, new crop corn values may trade near $5.40 next week.  It is at this level that we would look closely at extending new crop corn coverage.
 

 

(click the charts below to enlarge)

 

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