wheat leading the recovery efforts

7-21-10

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

Grains opened higher to sharply higher today, with wheat leading the recovery efforts, on news that the Russian Govt. is now going to sell 3 MMT of wheat stocks into their own domestic market in order to alleviate drought-stricken areas. We are getting more and more information from this region that the drought is now impacting prices to the point where inflationary pressures are building. This news was likely the catalyst for the 8-9 cent higher opening in the wheat, as was news that Algeria had reportedly tendered for 300,000 tonnes of wheat before the opening.

As we head into mid-day trade, with the wheat holding-onto most of its gains but the corn and beans now trading mixed, the market seems to be taking a pause in the row crops especially. With technicals looking somewhat vulnerable, today’s session is likely to be key momentum swing day—however today goes, it’s likely going to make the trend for the week I think. Weather is very uncertain; the market seems overall a little disappointed with the lack of precip. For the central and eastern corn belt this week. The rainfall amounts have not been as much as advertised by the models, when it comes to coverage area. But models continue to keep extreme heat confined to the southern plains and this has likely limited bullish enthusiasm.

This makes the mid-day weather models a key factor as to how we finish the session; we’ll also need to watch the risk-taking in the outside markets. So far today, the crude and copper have been supportive, but row-crops haven’t done too much with this and I think this is because the Bonds continue to trade near their contract highs—this suggests that the safe-haven buying is still outweighing the risk-taking at present. Technically, a close above $3.95 in Dec. Corn and above $9.80 in Nov. Beans would do a lot of good for the chart-watchers in my view.

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

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