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Corn market finds positive ground, wheat unchanged

08/11/2010 @ 9:49am

CHICAGO, Illinois (Agriculture.com)--The CME Group corn prices closed higher, wheat unchanged, just as some traders thought would happen Wednesday. Because some marketwatchers think Thursday's USDA report will be bullish, they wanted to get long the market today.

The Dec corn futures settled 2 cents higher at $4.11. The Nov. soybean contract closed 6 1/2 cents lower at $10.15 1/2. The Sep. wheat futures ended unchanged at $6.94 3/4. The Dec. soymeal futures contract closed $1.90 per short ton lower at $287.90. The Dec. soyoil futures settled 15 points higher at $42.38.

In the outside markets, the NYMEX crude oil is $2.30 per barrel lower, the dollar is sharply higher, and the Dow Jones Industrials are down 239 points.

Tim Hannagan, PFGBest.com senior analyst, says the market had both long liquidation and some buying, ahead of the Thursday USDA Crop Report.

“The action ahead of a crop report is the fear of the minds that have the profit. They don’t want to lose it. After last week’s rallies, obviously the ‘longs’ in the market are fat with profit. They have the risk,” Hannagan says. So, the profit-risk is losing the market.”

Hannagan add, “Towards the close of the session, we saw 'the longs' buying some, pulling the markets towards the unchanged mark, and corn into positive territory. There are people that are willing to risk that Thursday’s report could turn out to be bullish.”

It’s a profit-taking game, he says. "When you consider that the trend-following funds hold the profit, trading billions of dollar, realize that they don’t know a bushel of wheat from a phone booth, and they don’t care. They do understand seasonals and charts. So, you had to expect the funds to take some of the fat out of the market. 

In addition, most marketwatchers believe the worst news out of Russia is in the market. "So, long-term, there won’t be any attempts to get long unless Russia’s winter wheat crop can’t get planted, due to extremely dry conditions. If in five weeks, there are reports of Russia only able to plant 30-40% of its winter wheat crop, you could put another $2.00 per bushel on the wheat market." 

More price-pressure came from a sharp dollar rise and stock market decline, highlighting deflation, stirring a 'sell commodities' idea, one CME Group floor broker says. "It's a broad brush that is putting the markets down early. But, expect fear of the report to support markets last half of the session, particularly in corn, wheat."

On Wednesday, USDA reported 930,000 tons of corn sales on daily reporting. "This clearly shows that importers are moving to cover their supply needs," the floor broker says.

Meanwhile, there is fear growing that hot temps south of I-80 and too much rain in central Iowa are clipping soybean yields, he says. "Corn yields ideas are very mixed. Anecdotal surveys, in variety of locales, are suggesting variable crops. With Russia still dry for the next 10 days and worried about fall planting that will begin in the South next week…through October, plus Argentina remains dry, the corn market cannot afford U.S. trend yields."

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