Grains finished sharply higher today after a large corn sale this morning to unknown destinations, the crop tour information, as well as short covering. December corn finished 20 ¼ cents higher at $7.67, December wheat 9 ¼ cents higher at $7.97, and November soybeans 30 ¾ cents higher at $14.23 ½.
Today’s Pro Farmer crop tour shows most of what was expected which is a sharply lower corn yield. They are estimating an average corn yield of 147.9 bpa with a + or – of 1%. For soybeans the average was 41.8 bpa with a + or – of 2%. These numbers are supportive but probably not enough to cause any major surprises for Sunday night’s trade. Any changes in the precip forecast between now and Sunday night will be especially critical for the soybeans as many places still need rains. Looking at the chart below soybeans made a technical breakout to the upside and we could see some follow through buying from this next week.
This morning’s corn rally started off after a large sale of 365,760 MTs of US corn to unknown destinations. Even with this sale traders were calling the market unchanged to lower. When the market started trading higher, large volume could be seen between $7.48 and $7.50 and stops were hit above these levels to help push us towards the session highs.
With the Fed Chairman’s speech at 9 am, the US dollar started to fall and equities and commodities were able to rally. There weren’t any major announcements by Ben Bernanke besides the hint that another round of quantitative easing may come in September as they take an extra day to meet about their "tools". The announcement was not significant but failing to provide any support for the dollar could eventually mean higher commodity prices in the long run.
Monday we will have crop progress and we will be heading into the end of the month which can be especially choppy on position squaring. We want to stay in sustainable positions and remain well hedged at these levels. Please call your broker with any questions.
Have a great weekend!
My Explanation of the "Blow-Off Top" in Grain Prices
It Glitters but is it Gold?