We here in Northern Illinois were greeted with a deluge this morning, and while seeing that rain is certainly not a surprise this year, the intensity this morning was a severe as I have ever seen. I am not sure if I should be concerned or not but I did notice a number of animals assembling around a farm just outside of town over the weekend and what I thought was a new large machine shed being built is now beginning looking like an ark.
It would appear that the Greek/EU situation is over another hurdle as the Eurozone has agreed to provide fresh loans of up to 96 billion euro. I recognize that I by no means am qualified to understand the intricacies of international governmental finance and the capital will at least allow their bank to continue to operate but to me this would seem akin to throwing a drowning man a life preserver with a cement block attached as well. They already cannot service the debt they owe and the additional austerity measures that will be required should make it even more challenging for their economy to grow. It would seem that inevitably, there will have to be debt forgiveness but no one in authority appears bold enough to admit that, publically at least. Could it be that is why the dollar is strong again this morning in face of the news? It would seem one thing is certain, this will not be the last time we see markets, i.e., the dollar and by extension commodities jerked around because of the issues there.
For now, market focus will primarily be on weather and of course crop conditions. It would appear that we have more than enough rain in the forecast over the next week for a large swath of the Midwest which for some is by no means welcome news but temperatures are supposed to be more seasonal as well. There are exceptions but it always seems challenging to get markets excited about too much rain during the growing season. The trade is expecting to see crop ratings unchanged this afternoon and keep in perspective, 69% good/excellent ratings for corn and 63% good/excellent for beans does not suggest major problems.
The corn market most certainly provided the most encouraging performance last week. There was nothing in the production and supply/demand numbers that would have appeared to provide a stimulus so you have to believe that trade is already trying to factor in lower production numbers. As we commented last week though, any strength will have to be derived from production/supply issues as the demand side of the equation has been less than stellar.
Beans and wheat have struggled overnight and while corn was higher initially, now also appears to have lost momentum. All of these markets are sitting in overbought positions and without fresh bullish fodder each day, will be in line for corrective breaks. Weather/supply markets tend to be relatively short-lived by nature, (no pun intended).