Grains Likely to Continue Following Financial Markets
A lower start is expected this am, how much will be determined by the financial markets condition as we get closer to the grains opening. The very tentative early call is down 2-3 in wheat, 1-2 in corn and beans. Crude oil, equities and Dalian, China grain prices are all lower this am but all eyes are on the equity and credit markets for direction in the grains again today.
Corn harvesting was slower than expected at just 21% vs 41% average. Beans were only 51% done vs 61% average. Maturity lags normal also with corn 86% vs 95% average and beans 91% vs 96% average. Winter wheat planting is 73% done, the same as the average.
The USDA announced the sale of 120,000 tonnes of US beans to an unknown destination this am. The Baltic Exchange dry sea freight rate fell almost 11% today to 1615, hitting a 5 1/2 year low. It is now down 86% from its May high. Cheaper freight rates makes it less expensive to ship grain overseas. The US gulf to Japan rate has fallen from about $120 a tonne to just $40 a tonne, the equivalent of around $2 a bushel for corn.
There is more talk about the possibility of less expansion or even a cut back in South American bean planting due to credit problems in Brazil and government policies in Argentina, which would be bullish for US bean prices over coming months.
No rain is forecast in Argentina's wheat belt until early next week. Mostly dry weather is forecast in Australia's wheat belt for at least the next several days.
The US southwest winter wheat belt had up to 1 3/4" of scattered rain the last 24 hours with more forecast today. Dry weather is forecast Thur-Mon but the 6-10 day outlook calls for above normal rain, which will be welcome. The western corn belt saw up to 1" of rain yesterday but the east was dry. It is raining in parts of the east today, however. The west and east will see scattered rain today but dry weather Thur-Mon. The 6-10 calls for wet weather in the west but below normal rain in the east.
Watch the financial markets again today for direction in the grains. ---Vic Lespinasse
