Wild Overnight Trading Makes Any Opening Grains Call Tentative
Trading was wild overnight with huge ranges and volume. Nov beans traded between 911 and 989 before ending at 929, a few cents higher. Volume was over 15,000 lots. The Fed cut interest rates a half point this am, sparking a huge rally in equity markets, only to see them turn sharply lower again since then. All this volatility makes any grain call this am highly tentative. All we can do is watch the outside markets for guidance, including the DJ industrials and the S+P 500. Right now I am guessing the grains will be mixed but, again, this is highly tentative. Crude oil is lower and so is the $ but everything could change significantly over the next hour or so.
Fundamental news doesn't mean much in this market but here it is: ADM stopped 381 of the 605 oil out on delivery, which could lend a little support to the nearby oil spreads this am. Cargill and Bunge, two of the largest commercial users of the CBOT grain markets, say the proposed changes in the wheat contract to improve convergence don't do enough. To improve convergence of the cash and futures markets when a contract month expires, they want forced load out which would mean if you take delivery, you must take the wheat out of deliverable position. ADM, another huge user of the CBOT grain markets, believes the higher storage rates, lower vomitoxin standards, and more delivery points proposed by the exchange are enough to improve convergence and forced load out is not needed. It will be interesting to see how this all ends up.
The USDA crop report is out Friday am. Traders are looking for a corn crop of 12.076 billion bushels and a bean crop of 2.920 billion. Carryout stocks are forecast at 1.138 billion bushels of corn, 188 million beans and 552 million wheat.
The Argentine farmers strike is supposed to end after today but if it doesn't, this will start to become a bullish influence for our grain market.
A light freeze in parts of the Argentine wheat belt this am could have done some damage but dry weather is the main threat to the crop. Little rain is forecast until the weekend. The Australian wheat belt had rain in the west yesterday and more is expected there today. Dry weather is likely the rest of the week after today. There is a slight chance of a frost the next day or two.
The midwest US saw scattered rain the last 24 hours in the west and it is raining today in the east. More rain is likely late this week into next in the west. There is no threat of any freezing temps for the next week. ---Vic Lespinasse
