The bulls in the grain pits got their first taste

7/19/10 GLOBAL COMMODITY ANALYTICS & CONSULTING LLC

CLOSING GRAIN COMMENTS FOR MONDAY— The bulls in the grain pits got their first taste of 2010 of a bearish weather market on Monday’s trade; rainy weather crossing the country on the radar maps and medium-term models pulling the Western Corn Belt Hot-Dry Ridge were enough to cause the corn and beans to drop sharply…both losing double digits on the day. But, I suspect that losses could have been much worse had it not been for the wheat market; the wheat tried its best all session-long on Monday to shrug off the bearish weather trade, and was able to keep its losses to single digits. Argentina’s wheat belt had a cold-snap and the outside markets didn’t negatively influence funds, and these two fundamental factors seemed to me to make the difference in the wheat hanging-in there quite nicely on Monday’s trade. Key support of the $6 level in Dec. Wheat wasn’t challenged and so the technicals for wheat look good as well on Monday’s close. The same can’t be said for the corn and beans, however: both have seen some key moving averages or trend-lines violated and this is going to make USDA Monday afternoon crop conditions update very key—the trade went into Monday’s close mostly thinking that the corn conditions are going to be unchanged, while the beans could see 1-2 points of degradation. This, along with the fact that this week’s weather is likely going to make the corn crop, probably helps explain some as to why the corn lost over 3% on the day, Monday. ON MONDAY’S CLOSE BEFORE SETTLEMENTS: Wheat Down 6; Corn Down 13; Beans down 11.

CLOSING LIVESTOCK COMMENTS FOR MONDAY— Expectations for better cash markets and hot weather in the southern plains allowed the Feeder Cattle to shoot higher on Monday, with the feeders pulling the fats up to new 8-week highs. NE sales were reported late last week at around $94, but some sellers think that $95-96 will be the level that stimulates movement this week. As a result, the live cattle had a nice day on Monday at the Merc. The same couldn’t be said for the hogs—after starting out very strong and gaining nearly a $1 on the day, Monday’s close brought with it what appeared to be throw-in-the-towel liquidation by spec. longs. As a result, hogs finished lower, with the back-end pulling the nearby futures down. Cash markets for hogs remain quiet although some are wondering if the packers are a little short-bought here. ON MONDAY’S CLOSE: Hogs Down 7 to 72; Cattle Up 85, and Feeders Rallied 132 Higher.

This is Mike Zuzolo at Global Commodity Analytics, Have a Good Day.

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