Outside markets/overnights point grains lower but Export Sales bullish

Prices were lower overnight and the outside markets point the grains lower as well this am, as does the bearish US weather forecast. However, the Weekly Export Sales report was bullish this am, as were 2 USDA sales announcements so I doubt we will be as weak this am as we were overnight. Crude oil and the equity markets are lower while the $ index is higher, a bearish combination for all the grains.

There were no deliveries again this am against beans, meal or corn. Wheat and oil deliveries both totaled 4800.

Weekly Export Sales were a bit on the light side for wheat at 242,000 tonnes. Corn was very good at 1.155 million tonnes this crop year and 117,000 tonnes next crop year. Beans were very good also at 193,000 tonnes old crop and 250,000 tonnes new crop. Meal was minus 23,000 tonnes old crop due to cancellations but new crop sales were great at 304,000 tonnes. Oil sales were also very good at 69,000 tonnes.

The USDA had some pre-Fourth of July fireworks for the bean market: They announced China was a huge buyer of 660,000 tonnes of US beans this am for the 2009-10 crop year, which starts Sep 1. This is the largest single bean sale in recent memory. The USDA also announced the sale of 152,000 tonnes of US corn to an unknown destination for the 2009-10 crop year.

The Indian Meteorological Dep't said monsoon rains were 29% below average for the week ended July1 and 46% below average for June 1-July 1. The monsoon has shown some signs of improvement in the last few days but it is still well below normal, perhaps due to the El Nino weather pattern in the Pacific Ocean. Traders will continue watching this situation closely.

More dry weather is forecast for the already drought stressed Argentine wheat crop the next 7 days or longer. Hot and dry weather continues in the North China Plain, stressing crops there, especially corn. Continued dry weather in Russia's spring wheat belt is a concern with more of the same forecast the next 7 days.

The US southwest winter wheat belt will see some harvest delays due to weekend rain. Good growing weather is forecast to continue in the northern plains spring wheat belt. The Delta has been too hot and dry recently but cooler, wetter weather is forecast there this weekend, which will be welcome. The Midwest will see more beneficial growing weather with up to 1.5" of scattered rain forecast this weekend. Any high pressure ridge that might move into the belt later next week is currently not expected to last more than a few days, not long enough to do any damage from hot/dry weather. ---Vic Lespinasse

Outside Markets Supportive for Grains

A higher start is expected across the floor this am, roughly 7-10 in wheat, 3-5 corn and 15-20 beans. The outside markets are all supportive for the grains this am with crude oil and equities up while the $ index is down.

Deliveries were 0 again this am for corn, beans and meal and likely to stay this way in beans and meal for days or even until the Jul goes off the board Jul 14. This means bull spreaders of Jul in beans and meal have little to fear currently about getting delivery, making them more inclined to stick with their long positions in Jul either on an outright or spread basis. There were deliveries in wheat of 5300, and oil of 5700, where ADM put out 680 on delivery.

Chinese traders say they think China will release some corn from its huge stockpile as early as next week to cool off rising domestic corn prices.

Australia's Bureau of Meteorology is now saying an el nino weather pattern is very likely to be declared officially in a matter of weeks. This could cause a drought to develop in Australian wheat areas and severly reduce the size of the crop, currently expected around 21-23 million tonnes. The Indian monsoon has once again slowed in its northwest advance across the country, heightening fears for Indian crop production this year as roughly 60% of Indian crops are dependent on good monsoon rains.

The US southwest winter wheat belt is enjoying generally favorable harvest weather but up to 1.5" rain is forecast Sat-Mon which could once again disrupt harvesting. The Midwest will see light, scattered rain the next several days into early next week with normal to below temps. Warmer and wetter weather is forecast for the western half of the belt in the latest 6-10 day while the eastern half of the belt will see cooler temps and below normal temps. Either way, weather still appears favorable for Midwestern crops.

Remember, starting this am electronic overnight trading stays open until 7:15am, not 6am. Times are US Central.

A higher start is expected across the floor this am, roughly 7-10 in wheat, 3-5 corn and 15-20 beans. The outside markets are all supportive for the grains this am with crude oil and equities up while the $ index is down.

Deliveries were 0 again this am for corn, beans and meal and likely to stay this way in beans and meal for days or even until the Jul goes off the board Jul 14. This means bull spreaders of Jul in beans and meal have little to fear currently about getting delivery, making them more inclined to stick with their long positions in Jul either on an outright or spread basis. There were deliveries in wheat of 5300, and oil of 5700, where ADM put out 680 on delivery.

Chinese traders say they think China will release some corn from its huge stockpile as early as next week to cool off rising domestic corn prices.

Australia's Bureau of Meteorology is now saying an el nino weather pattern is very likely to be declared officially in a matter of weeks. This could cause a drought to develop in Australian wheat areas and severly reduce the size of the crop, currently expected around 21-23 million tonnes. The Indian monsoon has once again slowed in its northwest advance across the country, heightening fears for Indian crop production this year as roughly 60% of Indian crops are dependent on good monsoon rains.

The US southwest winter wheat belt is enjoying generally favorable harvest weather but up to 1.5" rain is forecast Sat-Mon which could once again disrupt harvesting. The Midwest will see light, scattered rain the next several days into early next week with normal to below temps. Warmer and wetter weather is forecast for the western half of the belt in the latest 6-10 day while the eastern half of the belt will see cooler temps and below normal temps. Either way, weather still appears favorable for Midwestern crops.

Remember, starting this am electronic overnight trading stays open until 7:15am, not 6am. Times are US Central.

We had a great day yesterday, making money in every pit, including oats. ---Vic Lespinasse

USDA Acreage Report

The USDA acreage report frequently has big surprises and this morning's version of the report was no exception! Corn acreage was 87.03 million, almost 3 million acres more than expected! Spring wheat was 13.77 million, almost 700,000 more acres than expected. Durum wheat acreage was 2.56 million, about 150,000 more acres than trade ideas while all wheat was 59.78 million, around 1.4 million acres more than trade estimates. Only beans were less than expected, 77.48 million, about 800,000 acres less than expected. Quarterly stocks were 4.266 million bushels for corn, about 80 million bushels higher than trade ideas. Beans were 597 million bushels, about 10 million bushels higher than thought while wheat was 667 million, in line with trade estimates. This report "found" several million of the "missing acres" from the March 31 Planting Intentions Report.

The early call is roughly 20-25 lower corn, 5-10 down in wheat and 5-10 up in beans. I suspect beans will not be up even that much as spillover selling from corn and wheat will restrain buying in beans. Of course, July beans (and July meal) are in their own universe and could continue going higher no matter what the rest of the floor does. Even if Jul goes lower, it should gain on the deferred months in both beans and meal. We are short all the grains except oats and I would stick with the short side today.

Link to this morning's full report (Report will open in a separate window)

The outside markets are a little higher in crude oil and equities while the $ index is a little lower but not enough to influence the grains significantly this am. It is the last trading day of the month and the quarter, which many traders think increases the fund's activity.

Deliveries were 6000 wheat and 5000 oil, both to June 29. There were no corn, bean or meal deliveries, as expected.

The Weekly Crop Progress Report yesterday afternoon showed winter wheat rated 45% good to excellent, unchanged from last week. Harvesting is now 40% done vs 46% average. Spring wheat rated 76% good to excellent vs 77% average. It is well behind normal in development due to late planting this spring with only 15% of the crop headed (a stage of development) vs 40% normally for this time in the season. Corn improved to 72% good to excellent vs 70% last week. Silking (a measure of development) reached 4% vs 8% average. Beans were rated 68% good to excellent vs 67% last week. Emergence hit 91% vs 95% average. Bean planting is now 96% complete vs 98% average. Beans blooming (a measure of development) reached 5% vs 10% average. Corn and beans are both behind normal in development due to their late planting caused by the cool, wet spring this season.

Taiwan is in Thursday for 82,000 tonnes of US wheat.

Dry weather is expected to continue stressing the Argentine wheat crop the next 7 days or longer. It is hot and dry in the North China Plain and more of the same is forecast the next 5 days or so, stressing corn and beans. The Indian monsoon continues to improve with more welcome rain sweeping north the rest of this week, at least. Welcome rain is forecast this weekend in parts of Russia and the Ukraine where it will help the outlook for the corn crop. However, parts of the wheat growing region of Russia will remain mostly dry the next 7 days, increasing stress on this crop.

The US southwest winter wheat belt will see good harvest weather until up to 1.5" rain arrives Fri-Sun which will once again slow harvesting. Only light, scattered rain is forecast in the Midwest the next several days, with moderate temps as conditions remain very favorable for corn and beans.

Evening Up in Grains Positions Ahead of USDA Report

A slightly better start is expected this am, 3-5 wheat and steady/2 better beans but 2-4 down in corn, similar to overnight activity. Crude oil and the equities markets are a little higher while the $ index is steady/mixed this am, not enough to influence the grains significantly. The main activity today should be evening up and positioning ahead of the big USDA reports tomorrow am.

Open interest fell sharply in most pits Friday, perhaps reflecting some early evening up ahead of tomorrow's reports. Wheat open interest fell 7000 lots, corn dropped 23,000, beans were off 8000, oil lost 11,000 and meal declined 1000.

It appears Argentine President Fernandez lost control of the lower house of the Argentine Congress in mid-term elections yesterday. This could eventually result in agricultural policy changes, such as a lower bean export tax, long demanded by Argentine farmers.

Weekend rain fell in eastern parts of the Argentine wheat belt but the very dry western part of the belt had little relief as wheat continues to suffer from the ongoing drought there. The Indian monsoon finally advanced northward and is now only a few days behind normal, with improving rainfall. The director of India's government weather dep't said good monsoon rain is expected the next 7-10 days. June 1-24 monsoon rain was 58% below normal so improving conditions now are very welcome.

Some relief from hot and dry conditions was seen over the weekend in the southern part of the North China Plain and more scattered rain is forecast there the next two days. However, the north will remain hot and dry this week while the south will return to dry weather after tomorrow. This will further stress corn and beans in this region. Cooler temps are predicted this week in wheat and corn growing areas of Russia and the Ukraine but little rain is in the forecast during this time, increasing the need for moisture soon.

Generally favorable harvest weather is forecast for the southwest US winter wheat belt this week, allowing harvesting to catch up with a normal pace. The Midwest will see mostly dry weather and cooler temps this week after light, scattered weekend rains. The 6-10 day calls for cool and wet weather, a welcome combination.

No matter what happens in the market today, it will be forgotten at the close as traders continue to concentrate on the USDA numbers Tuesday am.---Vic Lespinasse

Higher Grains Start Expected; USDA Trade Averages

A slightly higher start is expected in most pits this am, roughly 2 in wheat, 1 in corn and 4-5 in beans. Old crop beans and meal could be the exception, starting roughly 10-15 better and $6-7 better, respectively, in Jul. The $ is weak this am, a supportive feature for all the grains. The equity markets and crude oil are lower but only slightly, not enough to be an influence in the grains at this time.

The trade averages are now out for Tuesday's huge USDA reports: corn acreage is forecast 84.06 million; beans 78.21 million; all wheat 58.29 million; spring wheat 13.10 million and durum wheat 2.40 million. The USDA will also estimate quarterly stocks as of June 1st: 670 million bushels of wheat; 4.184 billion bushels of corn and 586 million bushels of beans. The acreage numbers will directly impact new crop prices while quarterly stocks will influence old crop prices. Weekly meal exports have exceeded the 5 year average for the last 14 weeks in a row, reflecting ongoing strong overseas demand for US meal.

Technicals: Every day this week Dec corn has tested support at the $4 level, each time bouncing after failing to break below it. The bears will probably try to force Dec corn below this mark again today, figuring there are a lot of commission house sell stops underneath.

Generally favorable weather is likely to continue in the major US grain areas with good harvest weather in the southwest winter wheat belt and good growing weather in the Midwest and northern plains spring wheat, corn and bean areas. This will pressure wheat and new crop corn and beans today. Old crop beans (and meal) should find continued strong support from ever-tightening supplies amid ongoing strong demand. Expect old crop to gain again today vs new crop in beans and meal as a result.

The weather overseas isn't as favorable with numerous trouble spots: too hot and dry in the North China Plain, stressing corn and beans there. If this continues into Jul, this would hurt corn as it tries to pollinate. Hot and dry weather is forecast to persist into next week in parts of Russia and the Ukraine, stressing wheat and corn. Very dry weather is likely to continue in Argentina's wheat belt with only light, scattered rain expected Sunday. Due to this severe drought, Argentine farmers are expected to plant only 2.9 million hectares of wheat this season, the smallest planted area for wheat since record keeping began over 100 years ago. ---Vic Lespinasse

Mostly better grains start indicated

A mostly better start is indicated this am, roughly 5 up in wheat, 2-4 in corn, 3-5 in old crop beans and steady/better in new crop beans. (July and August are old crop, Sep forward is new crop.) Crude oil is a little lower, as are the equity markets while the $ index is a bit higher, a negative combination for all the grains. Malaysian palm oil jumped 86 ringgit on growing concern about the poor start of the Indian monsoon, which could force India to import more oil, both palm and bean.

The Census Bureau May crush was 146.1 million bushels, over 2.5 million bushels less than expected. Oil stocks were 3.195 billion lbs, 25 million higher than expected. Meal stocks were 594,000 tons, over 150,000 tons higher than expected. Given the lower than expected crush, oil and meal stocks should have been even lower than expected, not higher, meaning this report was more negative for the products than it at first appears.

Weekly export sales were good for wheat at 368,000 tonnes and meal at 80,000 tonnes old crop sales and 229,000 tonnes new crop sales. The rest were in line with 686,000 tonnes of old crop corn and 250,000 tonnes of new crop; 28,000 tonnes of old crop beans and 215,000 tonnes of new crop; and 7,000 tonnes old crop oil and 1000 tonnes new crop.

Egypt is in the market for optional origin wheat this am with results expected shortly before the grains open. Taiwan bought 58,000 tonnes of old crop US beans today.

Technicals: Dec corn has challenged the $4 level every day so far this week and failed to break below it, bouncing back each time. While the chart for Dec corn shows a big downtrend since the start of the month, there is strong support on the chart just above this $4 level. A growing number of traders are buying Dec corn around current levels with a sell stop just below $4, risking 5-10 cents on the trade.

The Indian monsoon remains about 12 days behind normal in advancing to the north. The Indian government says in the week ended June 24 monsoon rain was 68% below normal, raising concern about the crops since 60% of Indian crops depend on monsoon rains. Rain is forecast in Argentina's very dry wheat belt Sunday but only light amounts, not enough to do much good. The North China Plain has been hot and dry lately and more of the same is forecast the next several days. However, cooler temps and some rain is forecast early next week, which will be very welcome.

The US southwest winter wheat belt should enjoy generally favorable harvest weather the next week or so with only light, scattered rain. The Midwest will see scattered rain and hot temps the next several days, keeping conditions for corn and bean development mostly favorable. ---Vic Lespinasse

Day of consolidating grain prices likely

A day of consolidating prices is likely today. Overnight trading resulted in mixed prices by the 6am Central time close. (Remember, starting July 1 overnight trading will end at 7:15am Central time.) The outside markets are mixed with crude oil a little lower while the $ and equity markets are a little higher, at least as of this writing. There isn't a lot of fresh market moving news to drive prices sharply in either direction this am.

The big USDA acreage report is now less than a week away and trade averages for this report should be out by Friday.

The Senate Permanent Subcommittee on Investigations issued a report blaming index funds for the lack of convergence in the wheat market over the last year. The report said excessive index fund buying fueled the huge price run up in 2008 and that the Commodity Futures Trading Commission should clamp down on index funds, eliminating waivers on position limits and/or reducing position limits. The report said index funds held between 35-50% of the open interest in wheat since 2006. This report will not have any impact on the wheat market today or anytime soon. Longer term there could be some changes implemented by the CFTC but we will have to wait to see what they do.

Technicals: The wheat chart still looks like it is headed lower but corn and the bean complex appear to have put in a "spike" bottom a couple of days ago and look like they are headed higher now, at least in my view. However, I am a trend follower and need trending markets to make money. Lately the markets have been chopping around, higher one day, lower the next. Long live the trend!

Indian government officials warned that the monsoon, which 60% of Indian agriculture is dependent on, is likely to be below normal this season, about 93% of average for the 4 month season which started June 1. They said it is likely there will be an El Nino weather pattern this season, which is associated with below normal monsoons. A poor monsoon in India might lend long-term bullish support for US grain prices. Over the last few days the monsoon has started to make further progress to the north but it is still too far south for this time in the season.

Some badly needed rain is forecast this weekend in Argentine wheat areas but the driest parts of the belt will probably see the least amount of moisture. Some much needed rain is forecast in the dry parts of the Canadian Prairies the next several days. Crops remain about 2 weeks behind normal in the province of Alberta, according to government officials there. Up to June 18, less than half the normal rain had been seen in this province so far this season.

The southwest US winter wheat belt will see generally favorable harvest weather the next several days. The Midwest will see hot temps and scattered rain the next several days, a welcome combination in most parts of the belt. ---Vic Lespinasse

Higher Grains Start Expected for "TurnAround 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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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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Crude oil, equities bearish combo for Grains

A lower start is indicated across the floor, around 10-12 wheat and corn, 15-20 beans, following similar overnight losses. Crude oil and the equity markets are lower while the $ is higher, a bearish combination for all the grains. Another major bearish influence for all the grains this am is the improving weather outlook in the main US growing areas. Some trouble spots remain elsewhere in the world, as usual, but with the possible exception of Argentine wheat, there is still time for conditions to improve in these areas outside the US. Malaysian palm oil fell sharply today, down 128 ringgit, a negative background feature for our bean oil market.

Stats Canada will put out their acreage estimates tomorrow am and the USDA will put out their acreage guesses June 30.

Technicals: All the charts now look bearish to me, including oil. Some pits, such as wheat and corn, have a strong downtrend in place, wheat due to improving harvest weather in the US, corn due to improving growing conditions.

Stress is likely again this week in Argentine wheat areas due to mainly dry weather at least the next several days. Northern Chinese growing areas will see more welcome scattered rain this week, keeping conditions there favorable. The central Chinese grain belt had beneficial rain early in the weekend but it has since turned hot and dry with temps reaching 104. More of the same is forecast until this weekend, when rain is forecast to return. The Indian monsoon is finally moving north but it is still 10-12 days behind where it should be at this time in the season. Rain and coverage have not been very good so far even in those areas that are seeing monsoon rain. Increasing rain is benefiting dry crops in western parts of the Canadian Prairies.

The northern plains spring wheat belt in the US is expecting scattered rain this week, which will be welcome now that the crop is planted. The southwest winter wheat belt had up to 1.5" widespread weekend rains, delaying harvesting. However, mostly dry weather is forecast this week and the 6-10 day calls for below normal rain, which will be welcome. The midwest saw up to 1.5" and hotter temps over the weekend. Scattered rain is forecast this week, along with continued hot temps. As long as the heat doesn't last too long and rain continues, this is considered a bearish weather pattern for corn and beans. ---Vic Lespinasse

Steady to Better Start Expected in Grains

A steady to mostly better start is expected this am following similar action overnight. The $ is a little lower while crude oil and equities are a little better, providing additional support for the grains this am. There isn’t much fresh news so far today. Informa will be out with their acreage guesses at 10:30 am, central time, which could modestly impact prices at that time. Expect to see the usual evening up or lightening up of positions later today ahead of the weekend.

Argentina will see very much needed rain the next 24-48 hours in their drought stressed wheat belt but the driest parts of the belt will get the least amount of moisture so additional rain will be needed again soon to improve conditions significantly. More beneficial rain is predicted in China’s main corn and bean growing areas the next few days, keeping condtions there favorable. Planting delays are expected to continue in much of India’s grain regions as the monsoon remains too far south for this time of year. Parts of the Ukraine and southern Russia’s corn and sunflower growing area have been hot and dry recently and more of the same is expected the next 7 days, increasing stress on crops there. Dry conditions are forecast to persist in western parts of the Canadian Prairies the next 5-7 days, increasing the need for rainfall there soon.

The US southwest winter wheat belt will see up to 1.5″ scattered rain today-tomorrow, causing some harvest delays. Generally dry weather is expected by Sunday through much of next week, allowing harvesting to speed up. The midwest saw widespread rain yesterday and more is forecast the next several days in the west but the east will have only light, scattered rain after Saturday. This rain is generally welcome except in areas that need to finish late bean planting and in areas where local flooding exists. ---Vic Lespinasse

Outside Markets Lack Decisive Direction

A mixed start is indicated early this am by overnight trading and the lack of decisive direction from crude oil, the $ and the equity markets this am. I suspect, however, that prices will be mostly on the firm side when the opening bell rings if only due to mostly better than expected weekly export sales, especially in corn and the bean complex: 269,000 tonnes of wheat; a total of 1.143 million tonnes of corn (767,000 old crop and 376,000 new crop); a total of 251,000 tonnes of beans (146,000 tonnes of old crop and 105,000 tonnes of new crop); a total of 202,000 tonnes of meal (93,000 tonnes old crop and 109,000 tonnes of new crop); and 21,600 tonnes of oil. Included in the bean sales were 49,000 tonnes of old crop and 60,000 tonnes of new crop sales to China.

We are awaiting word on Egypt's tender for optional origin wheat, results of which should be out shortly before the opening. US wheat is still a bit too high to be competitive in the world market so we might not get much, if any, of this business. There is talk China bought 100,000 tonnes of Argentine bean oil for Aug/Sep shipment. India's Weather Office reported today that the monsoon, on which Indian agricuture is heavily dependent, produced 51% less rain than normal in the week ending June 17 and 45% less rain than usual from June 1-17. The monsoon remains too far to the south for this time of year. If this continues, it would very negatively impact Indian grain production this season.

Argentina is now expecting very much needed rain in parts of their very dry wheat belt the next few days, although the driest parts of the belt are expected to get the least amount of rain. Mostly favorable weather has been the rule recently in China's corn and bean regions with more of the same forecast the next several days. There is a growing need for rain in parts of the Ukraine and southern Russia, areas that produce corn and sunflowers.

The southwest US winter wheat belt will see some more harvest delays due to scattered rain but conditions seem to be improving overall. The Midwest has had a good deal of rain lately and up to 2" more is forecast today-tomorrow. This could cause some localized flooding and delay late bean planting in the east. Much warmer temps are forecast over coming days, especially in the southern half of the region.

Egypt cancelled their optional origin wheat tender this am.

The new crop corn/bean ratio (Dec corn/Nov beans) closed at 2.45-1 yesterday, its widest level in 15 months. It was only a few months ago that this ratio was slightly under 2-1, which encouraged farmers to plant corn at the expense of beans.

The USDA acreage report will be June 30 but Stats Canada will put out Canadian acreage estimates June 23, next Tuesday. Traders are looking for 24.6 million acres all wheat vs 25 million last year; 5.7 million acres durum wheat vs 6 million last year; 3.9 million acres oats vs 4.35 million last year; 9.4 million acres of barley vs 9.36 million last year and 15.5 million acres canola vs 16.16 million last year.

Remember, overnight grain trading hours will be extended to a 7:15 am central time close each morning starting July 1. ---Vic Lespinasse

Tentative mixed to lower start expected in grains

A mixed to slightly lower start is tentatively expected this am. The early call is 5 down in wheat, steady corn and steady/2 better beans. The outside markets are mixed so they are not offering any guidance for the grains at this time. Traders will continue to watch them as the day progresses, especially the $, which could influence the grains significantly if it moves sharply either way.

Informa will put out their acreage guesses Friday at 10:30am, US Central time. The USDA acreage estimates, often a major influence on the market, will be out the morning of June 30.

There is a little talk China bought around 8 cargoes of South American beans so far this week, that's roughly 400-450,000 tonnes.

More unwelcome dry weather is predicted for the already severely-dry Argentine wheat belt the next several days or longer, making matters worse for the crop. More beneficial rain is forecast for China's main corn and bean growing areas this week. The Indian monsoon is starting to build strength and move north but it is still too far south for this time in the season. Welcome rain is now forecast over the coming week for the dry areas of the Canadian Prairies.

The US western Midwest will see up to 1.5" of welcome rain Thur-Fri with more possible Sun-Mon. The eastern half of the Midwest had up to 1.5" over the last 24 hours, which was welcome in areas planting is complete but not in areas that still need to finish planting. More is predicted Thur-Fri, up to 1.5" with yet more rain early next week. The southwest winter wheat belt will see light, scattered rain Thur-Sat but generally dry weather is predicted Sun-Mon and the 6-10 day calls for below normal rain, which will help harvesting speed up. The northern plains spring wheat belt will see light, scattered rain the next couple of days and again early next week. The 6-10 day calls for below normal rain.

We had a hugely profitable day Monday, a slightly profitable one yesterday and we hope to have another winning day today. ---Vic Lespinasse

Grain prices dictated by $

Grain prices will be higher to start, roughly 5 in wheat and corn, 15-18 in beans, led by the weaker $. Lately, the $ has dictated direction in the grains and this pattern is expected to continue this am. Equities and crude oil are higher this am, providing additional encouragement for buyers in grains but the key to grain's direction is likely to come from the $ so watch this indicator during the course of the session for continued input.

Yesterday's weekly crop progress report didn't contain any big surprises with bean planting 87% done vs 92% average. Only 72% of the crop has emerged vs 83% average. Winter wheat harvesting remains well behind normal due to excessively wet weather in the southwest with only 9% of the crop in the bin vs 19% average. The condition of the crops is very good with corn rated 70% good to excellent vs 69% last week, spring wheat 75% vs 72% last week and beans 66% (their initial crop rating of the season) vs 56% last year.

The Australian Bureau of Agriculture and Resource Economics in their initial estimate of their 2009-10 wheat crop put the crop at 21.97 million tonnes vs 21.4 million last year. They guessed the canola crop at 1.7 million tonnes vs 1.88 millon tonnes last year.

The China National Grain and Oils Information Center, the official government think tank, estimated Chinese bean imports in the 2009-10 crop year, which starts Oct 1, at 37 million tonnes vs the estimated 40 tonnes of imported beans this year, 2008-09, which ends Sep 30. They said bean imports will fall in the coming year as the government is expected to release some of their approximately 7 million tonne bean reserves into the domestic market. Bean oil imports are forecast to remain unchanged at 2.3 million tonnes in the 2009-10 year.

Technicals: The daily bar charts all look bearish now, the reason I am short all the grains.

More dry weather is predicted in the already very dry Argentine wheat belt the next several days or so, further stressing the crop and delaying planting. India's monsoon remains weak and further to the south than normal for this time in the season, delaying bean planting there. Continued dry conditions are stressing crops in western Saskatchewan and central/northern Alberta provinces, two of Canada's main grain growing regions.

More harvest delays are predicted in the US southwest winter wheat belt with up to 1.5" scattered rain overnight. However, only light scattered rain is forecast the rest of this week and the 6-10 day calls for below normal rain so harvesting should make good progress in the days ahead. The Midwest saw up to 1.5" of scattered rain the last 24 hours and more of the same is forecast the next several days, up to 2" in the east, up to 1.5" in the west. Dry weather is forecast this weekend. All this rain is welcome except in areas that still haven't finished planting. ---Vic Lespinasse

Lower Grains Start Following Overnight Losses

A lower to sharply lower start is forecast this am following big overnight losses. The $ is higher this am while crude oil and the equity markets are lower, a bearish combination for all the grains. Malaysian palm oil fell 65 ringgit today, a negative influence for our bean oil market.

The National Oilseed Processors Association May crush was 142.2 million bushels vs expectations of only 137.2 million. Oil stocks were 2.684 billion lbs vs ideas of 2.690 billion. These numbers are friendly for beans as well as oil: Beans because the crush was several million bushels more than expected, oil because with a larger crush, oil stocks should have been higher than expected, but they were actually a shade less than expected.

Argentina's Agriculture Secretary said rain is desperately needed in their wheat belt for planting and development of the wheat crop.

I recommend switching positions TODAY from Jul in wheat to Sep, from Jul in corn to Dec, in beans from Jul to Nov and in the products (meal and oil) from Jul to Dec. You can do this at anytime today between the opening and the close. It would probably be a good idea to do it SOONER rather than later but do it today.

Technicals: The daily bar charts all became bearish Friday (if they weren't already) with the exception of meal, which remains bullish looking for now.

Despite the very strong need for rain, there is little in the forecast for Argentina's very dry wheat belt the next 7 days or so, stressing the already planted crop and delaying new planting. Argentine wheat acreage is forecast to be the lowest ever as a result of this terrible drought.

India's monsoon is further south and weaker than it should be for this time of year, something that the market will watch with increasing interest if this trend continues. There is a drying trend in parts of the Ukraine and southern Russia the last few weeks, another area to keep an eye on. North China's grain belt is forecast to get beneficial rain this week. Central Chinese grain areas are hot now but welcome rain is forecast later this week. Rain is needed but not forecast in western Saskatchewan and Alberta provinces, two of Canada's main grain producing areas.

In the US Midwest, widespread rain is likely much of this week, welcome in areas that are planted but not in areas of the east that still need to plant beans. The southwest winter wheat belt had weekend rains and more is predicted today as well as later in the week, delaying harvesting of the crop. The northern plains spring wheat belt will see rain the next few days, which is welcome except in areas that still need to finish late planting. ---Vic Lespinasse