By: Dan Hueber –
Back to square one, again. The surprisingly large USDA report numbers from last week continue to weigh on grain and soy prices this morning and we find ourselves back down against price levels that we have not witnessed since the lows last fall. It is almost if it has functioned like a giant vacuum that has sucked the oxygen from the room and left the bulls gasping for any remnant of air in a desperate effort to remain alive. I have yet to really speak with anyone who believes that the number issued last week will turn out to be accurate, but at this time that matters little as they are the numbers that we will trade until private tours begin to publish figures. The first of these, that will at least be widely recognized is the Pro Farmer tour, which kicks off a week from today. For now, it would appear that we have to begin the process of rebuilding the foundation and determining if the world market continues to find value at this price range.
I can find very little fresh news that specifically pertains to the grain markets this morning. The weather outlook remains rather benign at this time with scattered showers throughout much of the mid-section of the nation. For the upper Midwest and the Northern Plains none of this would appear to erase the drought situation but it would also suggest there is not additional stress and deterioration. The trade is expecting the weekly ratings for both corn and beans to be flat to slightly lower this afternoon.
We are not seeing any help from the macros either this morning. Equity markets have recovered nearly half of the washout experienced last Friday as evidently traders are less concerned about missiles beginning to fly in the Far East. This also cooled off the metals markets which functioned as a safe haven last week and the US Dollar has rebounded. Keep in mind, the Dollar has in the past couple weeks, pressed down against what has been the major bench of support for the past two years and could be ready for a technical rebound higher. Needless to say, if that is correct, it would not be a positive influence on the commodity sector.
