Gavin Maguire: Weekly Grain Wrap-Up 7/31/09
|Sep 09 Corn||338 3/4||+ 6 1/2|
|Dec 09 Corn||348 3/4||+ 6 1/2|
|Aug 09 Beans||1134||+ 5 3/4|
|Nov 09 Beans||980 1/4||+ 9 1/4|
|Sep 09 Wheat||529||+ 12 3/4|
|Sep 09 KC Wheat||559 1/4||+ 9 3/4|
|Sep 09 Min Wheat||609||+ 9 1/2|
|Dec 09 Meal||299.4||+ 2.6|
|Dec 09 Oil||35.78||+ 0.10|
Corn closed 7-cents higher on the day and 22-cents higher on the week. A large rally in the soybean market combined with the USDA's announcement last week of an acreage revision has helped corn prices rally 35-cents off of their lows. The U.S. dollar is making new lows for the move and the stock market continues to rally. This is attracting money into commodities. We saw another round of "end of the month" buying late in the day. We should see additional money enter the markets early next week. Corn has had a significant break and was well overdo for a rally. We are now approaching levels that producers should start getting caught up on sales if need be. I have been waiting for Dec. corn to rally back to the $3.50-3.60 level. Overall, it sounds like the corn crop is getting bigger. This of course can still change depending on how the crop finishes out. If we get through August with cool weather and good rains and avoid an early frost, we should have a very large corn crop. Hopefully the outside markets will help corn stage another rally early next week and allow everyone to get caught up on sales. The market will also want to see what acreage changes the USDA makes on the August 12th report. If the changes are small, we could see corn turn back down and break as the farmer sells the remaining old crop bushels. When this happens, I think it will be time to start covering some sales.
August soybeans closed 6-cents higher on the day and $1.13 higher on the week! November soybeans closed 11-cents higher on the day and 67-cents higher on the week. Relentless Chinese buying helped old crop soybeans turn around and post a sharp rally this week. Old crop soybeans still look to be tight in the end and we are starting to see the extreme volatility that is likely to continue as we get closer the "end" of the marketing year. I said early in the week that it would not surprise me to see a sharp rally in August soybeans and that it could pull up November soybeans to the $9.50-9.80 level. Obviously, I had no idea that this would happen in 1 day! Soybeans look very good technically and this has caused massive short covering and new buying all within the past two days. This has put November soybeans back to the highs of my estimate. If we see additional buying next week, it would not surprise me to see November soybeans rally all the way back to $10.25. As a producer you should have orders in from the current price level all the way up to $10.25 to get caught up on sales in the next week or so. Again, we still have to get through August and we still have to avoid and early frost. However, if we finish off the growing season strong in the U.S. and South America expands as aggressively as is forecasted, we could see much lower prices this winter and/or next spring.