Corn Market Analysis for 08/02/2010
September Corn ended 2 1/4 lower at 390 1/2, 13 3/4 off the high and 1 1/4 up from the low. December Corn closed down 2 1/4 at 404 1/2. This was 1 1/4 up from the low and 13 1/2 off the high.
December corn turned lower into the close after starting the day by moving to its highest level since January 13th. Traders said that corn was a follower of wheat on the rally with further support from crude oil and the dollar, but one analyst noted that the rapid advance of the past few days may have attracted some cash market selling and scared off a few cash market buyers. Funds were also said to be on both sides of the corn market today, and that moved some other traders on the sidelines in futures. Some traders have expressed concern over excessive heat in the Delta and SW Corn Belt today and tomorrow as well as a forecast of above normal heat across most major growing areas in the US during the week of August 9-15. In the meantime, moderate rains moved across most of Iowa this morning. The USDA will issue its latest Crop Progress report this afternoon and some traders are looking for the good-to-excellent rating for the corn crop to be near unchanged from last week’s 72%.
September Ricefinished up 0.135 at 10.69, 0.31 off the high and 0.07 up from the low.
Wheat Market Analysis Report for 08/02/2010
September Wheat ended up 31 3/4 at 693 1/4, 36 1/4 up from the low and 18 off the high. December Wheat settled up 29 3/4 at 723 1/2. This was 34 1/2 up from the low and 18 1/2 off the high.
December wheat closed sharply higher again today and has closed higher for 5 sessions in a row. The market has rallied as much as $2.57 per bushels since the June 30th lows and traders see the short-term technical set-up as overbought. However, the COT report (as of July 27th) showed trend-following fund traders still holding a net short position of more than 15,000 contracts. A lack of rain in the Russia forecast and continued high temperatures in the forecast for this week helped to support solid buying support. Basis levels are weak due to the strong rally in futures and traders indicated an increase in selling of all grains by producers on the rally today. The market held on to near half of the early gains to close sharply higher on the day. The ongoing severe drought in wheat growing areas of Russia, Ukraine and parts of Kazakhstan, a weaker US dollar and a surge higher in energy markets were seen as positive forces for the market. Egypt bought 180,000 tonnes of Russian wheat, despite the drought, with traders indicating that no US wheat was offered on this tender. This week’s export inspections for wheat were 22.04 million bushels, up from last week’s 15.9 million. Cumulative inspection for the 2010/11 crop year jumped to 14.8% of the USDA’s projected total for the crop year, although this still lags behind the 5-year average of 15.9%. Inspections need to average 19.4 million each week to reach the USDA’s projection. Basis levels for wheat at the Gulf were lower this morning amid slack physical demand and sharply higher futures.
December Oats finished up 5 1/2 at 289 1/2. This was 7 1/2 off the high and 8 1/4 up from the low.
Soybean Complex Market Analysis for 08/02/2010
August Soybeans ended 3/4 higher at 1053 1/4, 4 1/4 up from the low and 19 3/4 off the high. November Soybeans closed up 5 at 1010. This was 19 1/2 off the high and 8 3/4 up from the low.
August Soybean Oil closed up 0.61 at 40.44, 0.55 up from the low and 0.48 off the high.
August Soymeal closed unchanged at 310.9. This was equal to the low and 6.7 off the high.
November soybeans closed slightly higher on the session but down near 20 cents from the early highs. Funds were active buyers early to support the market, but long liquidation selling emerged on the early rally and there was a lack of much commercial buying interest as the market drifted lower for much of the session. Talk of some rain in Iowa today and rain in the forecast for the delta for later this week helped to pressure the market off of the highs as hot and wet weather is seen as mixed to generally positive conditions for the developing crop. Meal lost moderate ground to soy oil on the day in both the August and December contracts. Traders said that a sharply higher crude oil market along with ideas that China’s economic growth could accelerate were supportive to soy oil today. This may be particularly supportive to oil since China remains in a trade war with Argentina that is switching soybean oil export business to the US. This week’s export inspections for soybeans were 5.933 million bushels, down from 7.149 million last week. Total inspections to-date stand at 95.6% of the USDA’s projection for 2009/10 versus the 5-year average of 93.9%. Inspections need to average 13.189 million bushels each week to reach the USDA’s projection. Traders are looking for this week’s crop ratings from the USDA to be near unchanged from last week when 67% of the crop was rated good-to-excellent.
As mentioned earlier, traders are looking at the Commitment of Traders report. The Commercial Trader momentum can be tracked by using the Commodity Futures Trading Commission Commitment of Traders reports. Our idea is that, in a value driven commodity futures market no one knows fair value like the people who produce it or, have to use it. In fact, it is precisely their sense of value that provides the commodity market’s rhythmic meanderings that swing traders love so much. Let’s face it, producers know when their product is overvalue and it should be sold just as well as end line users know when they should be stocking up at low prices. Therefore, trader should be able to incorporate this valuable information into their future market education.
This blog is reported by Andy Waldock. Andy Waldock is a financial advisor, trader, analyst, broker and asset managerfor Commodity & Derivative Advisors, located in Sandusky, Ohio. For that reason, Andy Waldock may have positions for himself, his family, or his customers in any commodity future market reviewed. The blog is meant for educational purposes and to develop a dialogue among those with an interest in the commodity future markets. The commodity markets employ a high degree of leverage and commodity trading may not be suitable for all investors. There is considerable risk in investing in commodity futures. If you are interested in reading other circulated articles, commenting on his publications or subscribing to Andy’s blog, please visit http://blog.commodityandderivativeadv.com, or if you have any questions, please call 1-866-990-0777.
The daily commentaries provide an analysis of the factors that influenced price activity, a recap of any reports released that day, a recap of each commodity’s traded price activity, and a look ahead at the next day’s schedule. Market commentaries for corn, wheat, soybeans, silver and gold are provided by CME Group. The information in the Market Commentaries was obtained from sources believed to be reliable, but we do not guarantee its accuracy. Neither the information nor any opinion expressed therein constitutes a solicitation of the purchase or sale of any futures or options contracts.