Possible Technical Correction Due in the Grains
A higher start is expected this am, 5-7 wheat, 5-10 corn and 5-7 beans. Crude oil is lower and the $ is higher, a bearish combination for the grains. This morning's expected higher start is based on the need for a technical correction following the very steep losses so far this week in most pits, especially beans.
Many traders think the Senate will pass a bail out bill late today and the House will follow suit later in the week, perhaps Friday. This is taking a lot of pressure off all commodity markets as a bail out bill is likely to be inflationary, which is bullish for commodities, including grains.
Argentine farmers are going on strike for 6 days, starting Friday. They will not sell any grain during this time. If this strke only lasts 6 days it won't impact our markets but if it is extended, especially for a prolonged time, this would be bullish for our grain markets as it would boost US grain export demand.
Meal deliveries were 333 lots today with 3700 oil on delivery too. There were no large commercial stoppers. FC Stone puts out its October crop estimates tonight ahead of the USDA estimates a week from Friday. Also Stats Canada puts out its crop production guesses tomorrow am. South Korea bought 275,000 tonnes of US/South American corn overnight.
Argentine wheat areas will see light, scattered rain today-Friday. There is a chance of freezing temps in parts of the wheat belt over the upcoming weekend, which could do some damage to the crop. Australian wheat faces a frost threat early next week in southern parts of the belt. Welcome but light rain is forecast for parts of the belt Fri-Sat.
The US midwest will be mostly dry today through Saturday with rain likely Sunday, especially in the west. The 6-10 day calls for warmer and wetter than normal weather in the west but cooler and drier than normal weather in the east. There is the possibility of a frost in the northwest part of the belt the next two mornings.
Index funds have had a very tough time the last 3 months due to declining prices in most commodities. The 5 largest funds were down an average of 25% during this time and they are now down 2.4% for the year to date. Of the 5, only the Detutsche Bank fund is up for the year, 8.2%. It is estimated roughly $150 billion remains in index funds, down from at least $200 billion earlier this year. ---Vic Lespinasse
