Grain Market Tug-of-War

August 5, 2011 10:31 AM
 

This information is provided by Archer Financial Services, Inc. 800-933-3996.

The grain markets showed back-and-forth movements this week between declining yield ideas in corn and late week economic concerns. 
 
The grains started the week out meekly, before racing to a limit up move in corn on Tuesday. The weekly crop conditions did show that conditions have stabilized, even when most in the trade felt that conditions were going to slip in corn for the third consecutive week. 
 
The grain markets caught fire on Tuesday following the release of some rather low yield estimates from some private sources. One source released its estimate following the Tuesday trade, but the market reacted as if that information was available during the session before the official afternoon announcement. 
 
A quiet profit taking trade on Wednesday was followed by a sharp sell off on Thursday as investors and traders moved quickly to convert positions into cash while the US stock market was in the midst of its massive 516 point drop. 
 
An economic collapse will always be a concern for a market that is trading at historically high price levels. However, barring such a calamity, look for December corn to challenge and exceed its contract high of $7.22 ¾ over the coming weeks. A national average yield in corn near 155 bu per acre will lead to these new highs, while a yield near 152-153 bu per acre will likely lead to $7.50 December corn. 
 
Soybeans will struggle as weather conditions have improved as that crop moves into its reproductive time. Given the current tight stocks situation, November soybeans, trading near $13.25, is at the lower end of its trading range.  Look for a test of the $14.00 level to once again occur over the next few weeks.
 

 

(click the charts below to enlarge)

 Market Movement Chart 8 5 11

 

Market Close Overview 8 5 11

 

COT 8 5 11


 

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