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CME Group corn closes over $4, soybeans over $10

07/29/2010 @ 11:00pm

CHICAGO, Illinois (Agriculture.com)--The CME Group corn market closed over $4, soybeans over $10, and wheat well on its way to $7 per bushel Friday. The wheat production losses in Russia are the main catalysts for the sharp rally Friday.

The Dec corn futures settled 13 cents higher at $4.06 3/4. The Nov. soybean contract finished 17 cents higher at $10.05. The Sep. wheat futures settled 34 cents higher at $6.61.

In the outside markets, the NYMEX crude oil is $0.45 per barrel higher, the dollar is lower, and the Dow Jones Industrials are down 27 points.

"With the crop losses mounting in the European countries, the fundamentals are in place to move these markets in dollars," Roy Huckabay, Linn Group Executive Vice-President says. Right now, farmers are apparently aggressively selling corn, soybeans and wheat, new and old-crop. They are trying to lock in some of these profits."

However, farmers should realize the world price structures are changing, Huckabay says. "Corn could work its way to $4.50-$4.60, and with any harvest problems $5.00 per bushel. Wheat has rallied $2.00 per bushel and soybeans are just getting started." 

Meanwhile, with projections of $5.00 corn, $12 soybeans, and much higher wheat ahead, farmers could be leaving $200-$300 per bushel on the table, by selling now," one broker/analyst says, requesting to remain anonymous. "This kind of market separates the men from the boys, the women from the girls," he says.

Don Roose, U.S. Commodities, Inc., says today's action is more follow-through from what's been happening the last few weeks. "European wheat continues to move higher on crop-loss issues, mounting higher production losses in the former Soviet Union and Black Sea areas. Consequently, you have a lot of spec buying coming into the market, end-users are trying to decide to cover their needs, resulting in a push-up in prices," Roose says.

Roose adds, "This rally is starting to change some of the relationships between corn/wheat and corn/beans. For example, before the rally started, the difference between Dec. corn/Dec. wheat $1.50 where wheat was over corn. Today, you have a difference between Dec. corn/Dec. wheat at $2.80. Wheat has gained a spread on corn by about $1.50. So, what you are seeing is a shift in demand from corn to wheat."

Meanwhile, there could be even more bullish news coming next week, Tim Hannagan, PFGBest.com senior analyst says. "One of the weather models projects that by next Wednesday a heat dome could re-enter the Midwest with above normal temperature and little to no rain. So, early next week we could start to hear this and start another weather related rally. As you know we can adjust the weather perspective daily, so stay close."

Hannagan says a close over $3.82 per bushel, basis Sept. corn, sets up next resistance at $3.94, then $4.06.   A closing price over $9.90, basis November soybeans, sets up $10.08 as next resistance then $10.26 per bushel. 

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