Reversal in Grains as Storms Roll Through Midwest
Jul 24, 2012
Good Morning! Paul Georgy with early morning comments for July 24, 2012 at 5:10 am. Grain futures are lower due to profit taking and follow through selling. We are still in a weather market as volatility is very high. However we are adding another twist to the weather market going on in the grain complex. The technical chart watchers are very concerned about the reversal in corn, beans and wheat on Monday. A close today in the lower half of trading range could accelerate the downward pressure. Weather forecasts overnight are keeping the significant rain covering for the Midwest later this week with temps cooling off. Drew Lerner from World Weather Inc. is watching the development of the El Nino pattern which could provide a major change in weather for Midwest. The USDA lowered G/E crop conditions by 5% in corn and 3% in soybeans to 26% and 31%, respectively. These numbers were a little better than trade was expecting. Poor to very poor conditions were raised to 45% for the corn crop. The macro market news of higher bond prices in Spain and Italy has large investors nervous about their commitment to commodities after recent rallies. USDA cattle inventory report is due to be released on Friday afternoon. That should give us a better idea of the long-term posture of the cattle industry. Feeder cattle futures are stronger as corn prices slip. Boxed beef was lower on Monday afternoon. Choice was down .54 and select was down .16. Pork prices are struggling with demand however the heat is slowing gains and breeding problems will likely have an effect on hog supplies down the road. Pork cutout values were down .26 on Monday.
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Markets as of 5:10 AM
Dec Corn -.10
Nov Beans -.35 1/4
Sep Wheat -.19 3/4
Aug Cattle -.05
Aug Hogs +.12
Sep S&P -2.00
Sep Dlr +.15
Sep Crude +.13
Aug Gold -4.10
Allendale Advanced Charts
Yesterday’s trade in the Nov Soybeans did set the market up for talk of a "top" being put in. We opened up at new contract highs at $16.91 1/2 and proceeded to sell off until we hit limit down at $16.16 1/4. If we do see a lower close tomorrow that will confirm a "key reversal" on the Nov Soybean chart. Until we see a close below $15.98 1/2 the chart has not sustained enough damage to assume a peak and reversal scenario.
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Nelson Notes from the desk of Rich Nelson
The EU problems persist. On Friday, Spain’s Murcia region asked the federal government for financial assistance. On Sunday another region, Valencia, also asked for a bailout. As of current, there are said to be six other regions ready to join these two.
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