It's All About the Weather
A lower start is likely in all pits following overnight losses and a stronger $ this am. Dalian, China grain futures are mostly lower with the exception of corn, which is a little better. Crude oil has been two sided so far this am, currently trading a little lower but not enough to be a market factor currently in the grains.
The main influence this am is -- guess what? The weather, as usual. At least for now, the worst of the flooding seems to be over with the Mississippi River receding, having crested at a lower level than expected in some areas, such as St Louis.
Most traders think the weekly crop ratings report this afternoon will show some improvement in the good to excellent condition of the corn and beans. Weekend rains were largely absent from the western corn belt while the east had scattered .25-1" amounts with modest coverage. The forecast this week calls for scattered showers of up to .75" in the west with 45% coverage Tue-Thur and up to 1.5" by Friday. The east will see scattered rain late tomorrow into Wed, up to .5" with 55% coverage followed by up to 1.5" Fri-Sat. The 6-10 day calls for above normal rain in the northwest with below normal amounts in the southeast. This forecast is normal and doesn't threaten the return of widespread rain or flooding so it is considered bearish for corn and beans. The southwest winter wheat belt had scattered, light rain over the weekend with up to 1" expected today covering about 2/3 of the belt. More unwelcome, harvest delaying rain is possible Thur-Fri but the 6-10 calls for below normal rain.
The Argentine wheat belt will be mostly dry this week with temperatures rising, increasing the need for rain again soon as rain last week will be used up quickly by higher temps this week. Rain is likely in western Australia's wheat belt late this week but little is forecast in the eastern half of the country, increasing the need for more moisture there soon. China's Agriculture Minister says China's summer crop will likely exceed 120 million tonnes, up over 2.5 million tonnes vs last summer. India's Farm Minister says their wheat harvest will be around 78 million tonnes, a record.
We switched to the short side in all pits on the close Friday and will remain this way today, with the opening call around 15-18 lower wheat, 7-10 down corn and 10-12 off beans. Stick with the short side at least today and tomorrow. ---Vic Lespinasse
