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Ottawa Coop Grain Comments

July 27, 2010

Wheat cautiously follows European markets higher.

 

 

·        Soybeans

 

November soybeans closed ½ cent lower.  Market consolidated after yesterday’s sharp decline, rejecting the overnight higher trade.  National ratings stayed steady last week at 67% good to excellent, which is unchanged from a year ago.  226,000 tons of new crop (8.3 million bushels) reported sold to China yesterday.  Demand is the current hope for price appreciation, as there seems to be little weather threat for soybean acreage:

 

 

  

 

Updated supplemental CFTC reporting shows index (inflation hedge-inspired) funds long 485,586 corn contracts and 179,073 soybean contracts net of futures and options as of 7/20/2010.  The macroeconomic factors were mostly negative today, although the stock market eked out a small gain.

 

 

Last

Change

September crude oil

      77.50

-1.4800

September heating oil

    2.0294

-0.0417

September $ Index

  82.3400

 0.0980

Dow Jones Industrial Average

10537.69

   12.26

 

·        Corn

 

September corn closed 1 ¼ cents lower.  Market tried to trade higher on surprise that crop ratings didn’t improve last week, but closed lower on mostly favorable weather for corn maturation. Market will closely watch private surveys (FCStone, Informa Economics) for clues to the yield estimate in the bell weather August USDA crop report on the 12th.  Reuters survey average of 18 analysts’ pegged yield at 163.5 BPA, identical to the USDA July forecast.  The August yield estimate should be close to unchanged from July due to overly wet conditions leading to scattered nitrogen loss.

 

National ratings were unchanged at 72% good to excellent; I continue to be surprised at Kansas good to excellent rating staying above 70%.

           

Corn Crop Ratings

(% good to excellent)

 

 

 

 

 

 

 

 

 

 

 

State

6/13

6/20

6/27

7/4

7/11

7/18

7/25

Illinois

72

69

67

68

65

67

65

Indiana

70

68

65

62

62

62

62

Iowa

76

75

72

65

71

69

70

Kansas

75

72

71

71

74

70

72

Minnesota

94

93

90

89

88

90

89

Missouri

49

49

46

47

50

48

50

Nebraska

81

78

81

83

86

84

85

Ohio

65

63

62

65

64

64

61

South Dakota

81

74

74

75

75

73

76

Wisconsin

86

86

84

83

84

81

79

 

Corn has lost nearly 10% in futures in less than 2 weeks.  If appears oversold, but remember the index and conventional funds are long well over 3 billion bushels of corn.  Who’s going to buy it?

 

·         Wheat

 

September wheat closed 3 cents higher. Matif (Paris) futures sent a new recent high before settling back a bit.  Historical drought and damage continues in Russia: http://www.bloomberg.com/news/2010-07-27/moscow-may-break-heat-record-as-russia-s-heartland-burns-drownings-rise.html .

 

The continued irony is the recent run up in futures may force Russia to suspend exports with the the presumption that some export business will eventually source US origin.  However, the variable storage rate in Chicago wheat incentivizes storage and deliveries against futures, not cash sales (at current basis levels). 

 

Non-Commercial Funds Estimated Position (futures position only, in contracts)

 

Commodity

CFTC 7/20/2010

Current Estimated Position

Today’s Estimated Activity

Soybeans

    +95,495

  +94,995

    -2,000

Corn

  +195,373

+163,873

    -3,000

KC Wheat

    +48,906

  +50,406

           -0     

 

This data and these comments are provided for information purposes only and are not intended to be used for specific trading strategies.  Although all information is believed to be reliable, we cannot guarantee its accuracy or completeness.  Commodity trading involves risks, and you should fully understand those risks before trading.