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Wheat leads, corn follows higher

05/18/2012 @ 9:37am

DES MOINES, Iowa (Agriculture.com)--With world crop-weather concerns, the CME Group wheat market helped the corn prices stay higher Friday.

The July corn futures settled 10 1/2 cents higher at $6.35 1/2, while the Dec. contract finished 8 3/4 cents higher at $5.37. The July soybean contract ended 33 cents lower $14.05, while the Nov. 2012 contract closed 18 cents lower at $12.88. The July wheat futures settled 37 1/2 cents higher at $6.95 1/4. July soyoil futures settled down $0.40 at $50.32. The July soymeal futures finished $10.10 lower at $417.90. 
In the outside markets, the NYMEX crude oil is $1.07 per barrel lower, the dollar is lower and the Dow Jones Industrials are down 59 points.

Dustin Johnson, E-Hedger grain analyst, says the story of the day is in the wheat.  

"July wheat has crossed its 200-day moving average for the first time since September 1st on Russian dry weather concerns.  Last Friday's COT report shows the "managed money" were net short 46,187 contracts of Chicago wheat.  Open interest has been declining in this contract which is a sign of liquidation. My guess is that today's COT report will show that they have reduced this net short position," Johnson says.  

This leads into the corn story. as corn has been trading in and out of a premium to wheat for the past year.  "Today is the lowest that the front-month corn contract has been to wheat in 7 months. But, it is still deriving strength from wheat move," Johnson says.  

The May Supply and Demand report showed a huge increase in wheat for feed (in the world numbers) which may give the wheat enough strength to diverge from corn again, he says.

Soybeans have had huge volume these past couple of days especially in the spreads.  

"The July - November soybean spread has recently hit a low at +73 3/4 on May 14th, to yesterday's new high for the move at +134.  Today it is down sharply.  These are massive moves for this spread and they continue to get affected by export sale announcements. 

"We are running well ahead of schedule for the USDA's export projections, so any additional sales could push the old crop beans higher.  Why are they down so much today?  No additional sale information, and potential fund liquidation as we know they are still loaded up with long positions," Johnson says.

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