Higher Start Anticipated in Grains As Outside Markets Appear Headed Higher
A higher (that's right, higher) start is expected this am, following the outside markets. The early call is around 10 higher wheat, 2 up in corn and 20 better in beans, all subject to big changes by the opening bell. The $ is lower and crude oil is higher with the equity markets also expected to bounce after their huge sell off the last couple of weeks. Fundamentals have been thrown out the window lately and they remain in the background as the grains continue following the outside markets. If the outside markets remain higher, expect the grains to do the same today. Whether these markets have finally bottomed out and will start recovering or this is just a pause in the world wide credit crunch remains to be seen. For this am, however, all the markets appear headed higher, which will greatly influence the grains.
We have expanded limits today in all the grains except wheat: $1.05 in beans, 45 cents in corn, $30 in meal and 350 points in oil.
Corn harvesting reached only 14% vs 30% average last week according to yesterday afternoon's weekly crop progress report. Mature corn is only 73% of the crop vs 89% on average for this time of year. Bean maturity reached 83% vs 91% average. Bean harvesting was further along than expected, 31%, but still behind normal, 41%. Winter wheat planting is 59% done against 60% average.
The UN's Food and Agriculture Organization reported biofuels are partly to blame for the big jump in world grain prices. They also said the benefits of using ever-increasing amounts of biofuels don't outweigh the higher food costs.
There is still a chance for a frost in parts of the wheat belt in Argentina today but warmer temps are predicted starting tomorrow. Rain is still badly needed and the next chance comes this weekend. There is a chance of frost in parts of Australia's wheat belt with only light, isolated rain in the outlook. More rain is needed soon to keep wheat prospects from declining further in both Australia and Argentina.
The US delta will see some bean harvest delays with more rain today after rain fell over the last 24 hours in parts of the region. Dry harvest weather is forecast to return starting tomorrow and continuing through the weekend. The southwest winter wheat belt saw scattered, welcome rain the last 24 hours, up to 1.25". Mostly dry weather is forecast today through Saturday with scattered rain returning Sun-Mon. The 6-10 day calls for above normal rain in the east and central parts of the belt, below normal rain in the western areas. The midwest saw scattered rain in the west but mostly dry weather in the east yesterday. The west will be mostly dry the next few days but rain is forecast over the weekend. The east will see rain today and tomorrow, up to 1" before dry weather moves in Thur-Sun. There is no freeze threat the next 7 days.
Watch the outside markets today for direction in the grains. ---Vic Lespinasse
