Easing Turmoil in Financial Markets Taking Pressure off Grains

A higher start is indicated in all pits, roughly 15-20 in wheat, 5-7 corn and 10-15 beans. Dalian, China grain futures were down today but they were probably just reacting to our losses yesterday. Crude oil is higher this am while the $ is lower, a bullish combination for our grain market.

All the turmoil in the financial markets seems to have subsided a bit overnight with the Fed agreeing to bail out AIG. This should take a lot of pressure off the grain market. Of course, the situation is fluid and any change could cause a significant reaction in all the markets so traders need to be watchful. The CME announced AIG is being allowed to reduce the long positions in grain and livestock futures of their DJ-AIG index fund by the use of block trades with two other index funds. Block trades are off-exchange trades. The DJ-AIG index fund had about $55 billion in assets at the end of June, making it the second largest index fund in the business behind SP-GSCI. It is not expected these block trades will have any impact on the grain or livestock markets today.

Weather: Mostly warm, dry conditions are forecast across the midwest, delta and southwest the rest of this week and over the weekend, allowing corn and beans to continue developing without any freeze threat in the midwest while delta bean harvesting speeds up. The 6-10 day calls for above normal temps in the midwest with below normal rain in the east and above normal rain in the west. The delta is expecting below normal rain during the 6-10 day period, which should allow for continued rapid bean harvesting.---Vic Lespinasse