Weather Overtaking Other Influences on the Grains
A higher start is expected in all pits today following overnight gains on wetter corn belt weather. The latest forecast calls for up to 2.5" of rain over 80% or more of the belt between today and Saturday, on top of up to 1.5" of moisture in the western half of the belt during the last 24 hours. Additionally, the 6-10 day outlook calls for above normal rain. Many areas are still way too wet and all this additional rain will increase renewed flood potential. The southwest winter wheat belt will see only modest, scattered rain the next several days along with hot temps.
Argentina wheat areas will be mostly dry until Sun-Mon, when welcome rain is forecast. Australia will see some beneficial rain in the western wheat areas but the eastern part of the belt will be dry the next 7 days, stressing the crop there.
The rest of the news is relatively unimportant compared with the weather: Crude oil is a little lower ahead of the weekly oil stocks report at 9:30 this am, Central time. The $ is a bit lower too ahead of the big Federal Reserve Board policy announcement at 1:15 this afternoon, Central time. The Fed anouncement could impact the grain market tonight and tomorrow. Egypt bought 150,00 tonnes of wheat, mostly Russian origin, today. The benchmark grade of Thai rice fell 3% vs last week on slow demand, trading at $770 a tonne today. Dalian, China grain futures were mixed today. The Argentine farmers strike appears over for now but the situation could change at any time and bears watching.
Texas Governor Perry again asked the EPA for a waiver on the ethanol mandate with a decision not expected until late next month. Other states would like a waiver also, which would be negative for ethanol demand and corn prices, if only psychologically. The cash bean market at the Gulf is sharply higher today as supplies tighten due to slow shipment of barges to the Gulf on the flood swollen Mississippi River.
Despite expected early strength, I would stick with the short side today. ---Vic Lespinasse
