EHedger Closing Grains Commentary 8/18/09

Published on: 17:03PM Aug 18, 2009
Sep 09 Corn
314 ¾  
+ ½ 
Dec 09 Corn
322 ½
+ ¾ 
Nov 09 Beans
956 ½  
+ 2 
Sep 09 Wheat
- 1 ¾
Sep 09 KC Wheat
498 ½ 
- 1 ¾ 
Sep 09 Min Wheat
540 ½  
- ¼ 
Dec 09 Meal
+ 1.8
Dec 09 Oil
- 0.01

Soybeans, Corn Edge Higher As Selling Pressure Wanes
  • Nov Soybeans Rebound 4 ½ c, Dec Corn 3/c4 c in Quiet Trade
  • Friendly Weather, Bearish Technicals Still Threaten More Weakness
The soybean market finally managed to get out from under the recent torrent of selling pressure and catch its breath Tuesday. Overall conditions were very quiet across the board, and the commodities markets in general edged quietly higher on the day as the US dollar eased lower and the stock markets firmed a little.
The mood in the ag arena remains pretty solemn, as highly favorable weather conditions/outlooks dominate sentiment and raise expectations for hefty crops of both corn and soybeans. Meanwhile, key end users, such as the hog and cattle industries, remain on the defensive following a rough few months in which profit margins were erased or turned negative. The net result is a pair of markets unable to escape from the shroud of potential over-supply amid a patchy demand environment.
As long as that scenario prevails, prices of both corn and soybeans look liable to struggle holding on to any gains, and indeed look destined for lower levels. Corn may prove to be the more vulnerable of the two for the near term, as a majority of that crop looks now set to get through it’s most crucial developmental phase without any weather struggles. The soybean crop still has a few weeks to go before the same can be said for it, so until then we may see the beans ‘hang in there’ a bit better, and potentially stage the odd rally.
But, if the weather remains warm and moist across the Midwest into September, then the bean crop will likely be considered potentially very large, and that would set the stage for another downward leg in prices.
Of course, an early freeze would change the story, but then again that’s the case every year, and it seems a bit strange to worry about that now during the middle of August. So, unless the weather patterns change drastically, we expect rallies of both corn and soybeans to be limited for the rest of the month, and for the downside to stay the path of least resistance. 
Wheat’s outlook is similarly grim, if not more so, and indeed CBOT wheat prices ended the day lower despite the supportive influences of corn and beans on the day. Global wheat stocks continue to climb, and with demand a little sour we are expecting wheat prices to continue to grind mainly lower in the weeks ahead.
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