Outlook from the CBOT Floor for May 14, 2012
In wheat the market remains choppy at the bottom end of the range with the fund short helping keep the market afloat. Nothing bullish from demand with world supplies high and competition stiff. A rather sad note comes from India. Reports from northern regions say millions of tons of grain are rotting due to rains on uncovered sacks. This is due to the bumper harvest exceeding storage capacity. A good problem to have if the government would do anything constructive with it. Almost 50% of India’s children are malnourished yet the government will not sell the grain at a discount to domestic sources due to a growing federal deficit. Sometimes the big picture should outweigh fiscal policy. Just a thought.
Looking to today, the obvious pressure on beans and the whole complex will continue as pressure on crude accelerates. Technically beans is a disaster with potential on the weekly chart down to $11.40. Corn should hold but a strong USD points lower here as the week progresses. Wheat and its large short will be interesting to watch this week. I favor a bullish stance here as the relationship between corn and wheat corrects and problems in Russia poke the long sleeping bull in that market.
Weather highlights courtesy of the Daily Grain Report:
Rains in the northern plains are a mild concern as planting is delayed. Recent rains over the eastern OH river valley caused mild flooding. Good weekend rains in IA and IL helped alleviate early moisture concerns in central regions. Domestic weather remains a mild concern with more eyes on Russia, China and eastern Europe.
Recent rain in the NE Chinese plains was much needed. Amounts of .10-.80 fell north through Jilin and Heilongjiang. Hebei also received rains which were less needed but welcomed.