Higher Grains Start Expected for "Turn Around Tuesday"

A higher start is expected across the floor this am, 3-5 wheat, 1 corn and 15 beans. Crude oil and the equity markets are higher while the $ is lower, a bullish combination for all the grains. Malaysian palm oil rallied sharply today, up 129 ringgit, which might lend a little support to our bean oil market. It's Tuesday and oftentimes on Tuesday prices reverse course from Monday, the "turn-a-round Tuesday" pattern.

The Weekly Crop Progress Report yesterday afternoon showed winter wheat rated 45% good to excellent vs 44% the previous week; corn was unchanged at 70%, beans were 67% vs 66% last week while spring wheat was 77% vs 75% the week before. Winter wheat harvesting reached 20% vs 31% average for this time in the season. Bean planting only made slow progress in the last week, advancing to 91% vs 95% average and emergence is now 84% vs 90% average.

Stats Canada estimated Canadian farmers planted 24.93 million acres of wheat this year vs trade ideas of 24.6 million. Durum wheat planting was 5.6 million vs ideas of 5.7. 17.5 million acres of spring wheat was planted. Canola planting reached 15.8 million acres vs ideas of 15.5 million while oat planting was 3.9 million, the same as trade estimates. None of these planting numbers should have much impact on prices as they were all about as expected.

Technicals: On June 1, Sep wheat closed a few cents above the $7 level, only to end yesterday at just $5.75, a drop of over $1.25 in just 3 weeks! We captured roughly $1 of this break in our last 3 wheat trades between Jul and Sep. There was a similar major drop in oil during this time while corn, beans and meal had big sell offs the last two weeks or so. All their charts still look bearish, which is why we are short all of them. However, due to the large scale of this sell off in this brief time span, these markets are probably due for some sort of technical correction and that is what could happen today with the outside markets serving as a catalyst for the bounce. I would not follow any rally effort today, preferring to stick with the short side but I could switch on the close. Subscribers, see my numbers in the trade chart.

The chances of an El Nino weather pattern in the Pacific Ocean causes fear in some parts of the world, such as Australia, where El Nino is associated with drought. In other parts of the world, such as Brazil however, El Nino is associated with ample rain so Brazilian farmers are hoping the El Nino forecast is correct. Rain is very badly needed in Argentine wheat areas and there is a chance of some rain there this weekend but it will stay dry until then. The Indian monsoon is moving north but it is weak and unless it increases in intensity it augers poorly for Indian crops this season, many of which depend on the monsoon for most of their moisture needs.

Here in the US, hot temps and scattered rain are forecast the rest of the week for the Midwest corn and bean fields, which is welcome in all areas except where late bean planting isn't complete. Good harvest weather is predicted the rest of the week in the southwest winter wheat belt with the 6-10 day calling for below normal rain, which should allow harvesting to speed up. Overall, US weather conditions are favorable. ---Vic Lespinasse

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