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Grains close sharply higher

08/23/2011 @ 9:40am

CHICAGO, Illinois (Agriculture.com)--With plenty of support from falling crop ratings, talk of an upcoming 'heat' dome and favorable outside markets, the CME Group grain and soybean markets closed sharply higher Tuesday.

The Dec. corn futures closed 9 cents higher at $7.43 1/2. The Nov. soybean contract settled 12 cents higher at $13.97 1/4. The Dec. wheat futures finished 18 1/2 cents higher at $7.84 1/2. The Dec. soyoil futures ended $0.03 higher at $56.21. The Dec. soymeal futures settled $5.80 per short ton higher at $375.50.

In the outside markets, the NYMEX crude oil is $1.27 per barrel higher, the dollar is lower and the Dow Jones Industrials are up 275 points.

The stock market has surged since the earthquake in Virginia.

Tim Hannagan, PFGBest.com senior grain analyst, says the markets showed signs of giving up opening strength, but instead bounced back. "Well, the higher corn open gave way to a drop on the day's high. Soybeans and wheat drooped off their highs as well. But, last night's bullish crop condition reports and stronger outside markets pulled us back up. A more measurable correction won't occur until we see that big down day in crude and stocks which always pops up," Hannagan says.

Meanwhile, responding to a price call request, Hannagan says higher price levels are foreseen. "Of course, we will see an 8 in front of corn and 14 beans. But, corn will wait for the Sept. USDA Report."

There is talk of a heat dome entering back into the Midwest during the Labor Day weekend, Hannagan says. 

Regarding the wheat market, the Funds continue to sweat over the heat in the U.S. Southwest winter wheat states threatening planting season in September. "Trend following funds have gone from short 54 thousand contracts three weeks ago to 45 thousand this week. Should they continue to buy back the remaining 45 thousand contracts could pull wheat up to 8.75," Hannagan says. 

It's the last full week of trading for August. "Funds are fat with long profits and due to go to the bank as they always do. With this in mind, traders are cautious about getting too bullish."

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