rain is on the radar screen again today in the central corn belt

7-20-10

GOOD DAY EVERYBODY, HERE’S THE LATEST AT THE MERC AS WE HEAD INTO THE MID-DAY SESSION:

With rain is on the radar screen again today in the central corn belt, outside markets such as equities making new two-week lows, and a weaker overnight Globex trade, the grains started-out the day on the defensive today, with all three major pits falling 6-7 cents on the opening.

There are, however, some fundamental bright spots so to speak, and we should probably be on the look-out for the market potentially I think finding some light short-covering between now at mid-day and the closing bell:

The rains so far since the weekend have been very hit-and-miss in the central and eastern corn belt; some clients in central Il for instance have had over 5" of rain in their gauges, and other places have registered 8-9" totals since Saturday. That’s too much of a good thing, in my book. But if you drive 40-50 miles, others have had only 1 to 2 tenths.

Iraq has announced that it has now purchased 2 MMT of wheat and over 700,000 tonnes of rice to meet their 2010 demand needs. This type of feed-grain buying should help support prices, with the wheat still the leading candidate to dictate where the trend is for the grains, in my view. Egypt was also in for 120,000 tonnes of Russian wheat this morning.

And USDA reported before today’s opening the sale of 115,000 tonnes of new-crop soybeans to China.

With all this demand news, the market has in fact found short-covering led by the beans—with November Beans trading positive at times.

As we head into the close, let’s see if the beans can ignite some wheat short-covering and keep Dec. Wheat from falling below $6 bushel—a key support line in the daily chart. If this can happen, we may actually see some turnaround then in the corn. However, with the silking of corn this year 35% ahead of last year, the corn is likely going to continue to be the short-side of spreads today.

THIS IS MIKE ZUZOLO AT GLOBAL COMMODITY ANALYTICS, HAVE A GOOD DAY EVERYBODY.

General Risk Disclosure—There is substantial risk of loss in trading futures and options, therefore you should carefully consider whether trading is appropriate for you in light of your experience, objectives, financial resources and other relevant circumstances. The information above is not meant to be advice to buy or sell futures and options.

Options Risk Disclosure—The purchaser of options should be aware that he could lose all premium paid for such options as well as any commissions and fees. Further, purchasing deep-out-of-the-money options have a remote chance of becoming profitable. The writer or seller of options should be aware that there is unlimited risk and could result in such seller being required to maintain a futures position with any associated liabilities for margin.

Information Disclaimer—The information and data contained herein was obtained from sources deemed reliable. Their accuracy and completeness is not guaranteed. Any decision to purchase or sell based upon such information is the responsibility of the person authorizing the transaction.

Seasonal Disclaimer— Seasonal demand and current news in commodities are already reflected in the price of the underlying futures and options.

Copyright, 2010 Global Commodity Analytics & Consulting LLC