Grains May Be Oversold; Persist in Following the Financial Markets
A higher start is expected in all pits this am, 5-10 wheat, 5-7 corn and 10-15 beans. These calls are highly tentative, of course, as the grains remain dependent on the direction of the financial markets as much, if not more, than the fundamentals in the grain market. Currently, the $ is higher, crude oil is lower and the equity markets are down, although not as much as earlier this am. All these outside markets are bearish for the grains and could cause them to open lower despite overnight gains in the grains.
Weekly export sales were toward the low end of trade ideas in wheat, 436,000 tonnes. The rest were very good, 975,000 tonnes of corn, 1.028 million tonnes of beans, 242,000 tonnes of meal and 16,000 tonnes of oil, which could lend support to the opening in these pits. Many traders think the grains are oversold and overdue for a technical correction, which was one of the reasons for yesterday's late rally. Any recovery in the outside markets would likely trigger a strong upward response in the grains today, which will keep the bears on guard and all eyes once again on the financial markets.
Australia will see mostly dry weather the next week or so, further stressing the already dry wheat crop in South Australia and elsewhere. In Mato Grasso, Brazil's largest bean producing state, very hot and dry weather will persist the next couple of days before cooler weather moves into the region with some rain early next week. Argentina will be mostly dry today-Sunday with welcome scattered rain of .3-1.5" Mon-Wed.
The US southwest winter wheat belt will be dry the next few days but .3-1.5" of welcome rain is forecast Mon-Wed in northern, eastern and some central areas. The midwest was mostly dry yesterday. Scattered rain of .5-1.5" will fall in the west Tue-Wed with .25-1" of scattered rain in the east the second half of next week. The 6-10 day predicts above normal rain for the belt. All this moisture will slow already delayed harvesting of corn and beans. ---Vic Lespinasse
