Corn Estimated Fund Position
Trends – December Contract
Short Term: Up Net Long Futures and Options: -167692
Long Term: Down Change: -7000
Overnight Trade: Z +8 @7:30 AM
The December corn regained Friday’s losses, but has not made a new high for the move. There is concern about dry areas in parts of Iowa and Minnesota and concern about crop development in general. Crop condition ratings are expected to be steady to lower in this afternoon’s report. It will probably take more than a 2 point drop to cause any concern and steady conditions would probably be considered bearish. The Pro Farmer crop tour is under way and traders will be monitoring their results closely, especially in the problem areas of Iowa.
Wheat Estimated Fund Position
Trends – September Contract
Short Term: Down Net Long Futures and Options: -72017
Long Term: Down Change: -2500
Overnight Trade: Chicago: U +6 KC: U +6 @7:30 AM
Another day, another sideways session in the wheat market. I guess traders are waiting to see what the corn market does or are waiting for another round of big export sales. Either way this market is just marking time. I won’t get excited about the wheat until the September contract either closes above $7.10 or below $6.90. I do like bull spreading the market on ideas that the new crop will be off to a good start thanks to the recent rains.
Soybeans Estimated Fund Position
Trends – November Contract
Short Term: Up Net Long Futures and Options: 24153
Long Term:Up Change: -4000
Overnight Trade: X +22 @7:30 AM
The November soybeans traded above trend line resistance and made a new high for the move. Weather concerns and strong export sales are turning this rally into something more than just a short covering bounce. The next major test will be at the $12.95 area. A close above that level would make two months’ worth of short traders wrong and look very bullish on the charts.
Things to watch
Corn Belt – Well, my fears about reaction to a week of limited rain in the Corn Belt are coming to fruition. It seems there is an abundance of fear about dryness stress in soybeans for the past week of dryness and the coming week of limited rain…all with temps normal to below normal, mind you. I just don’t see it…but I guess I am not supposed to see it either. My thought is that if your soybeans can not handle some dryness with when the temperatures feature no extreme heat…shoot, not even any moderate heat, maybe you should try and grow something else. But I digress. Here is what I have in my forecast going forward. Temps this week will push back into the lower 80s. That is about all we are looking at. Moisture will be limited…as I mentioned last Thursday night. I still look for .25-.50” rain totals for the week this week with 60% coverage. If there is an area I will skew higher, it will be in the upper Midwest (MN/WI/even northern IA) where they can see closer to an inch. Next week rains are a little better. I have half to 2 inch totals, again around 60% coverage. Then for the first week of September…1-3 inch rains, 70% coverage. There is no threat of cold air through mid September. This current ridge build will hold through Labor Day weekend, meaning temps will likely have the longest stretch of normal highs and lows that we have seen all summer. But notice…I said nothing about above normal temps….because there still is nothing to suggest any kind of move to detrimental heat. And actually, wasn’t it just last week that people were talking about needing some heat to increase growing degree units? The market just seems bent on trying to put some kind of weather premium in this thing. Right or wrong…it’s the way it is.
Plains – The northern plains will do battle to be the warmest spot in the country over the next few days. Lower to mid 90s will be the name of the game. The heat will come with some higher dew points, and instability, so thunderstorms are likely, especially Monday. Even when temps cool a bit at midweek, the northern plains will still see temps normal to above. In the central plains, two days of dry weather are under the region’s belt, and I look for likely 10 more. Models show no significant rain threat through the turn of the month. There is plenty of time to change that, but my first reaction is that the concern about too much water recently causing problems for wheat seeding will go away very, very quickly. And honestly, part of me thinks that we are only days away from a dryness complaint coming from somewhere in the HRW belt. Temps will be above normal slightly the remainder of this week, but then look to pull back to normal levels next week into early September. An increase in tropical activity over the next few weeks will increase the chance and likelihood of moisture getting into TX and southern OK…with TX seeing the biggest potential for benefits.
Tropics – Erin fizzled out, and the western Caribbean wave really has promoted nothing but a slight increase in thunderstorm activity. But, the tropics are starting to pick up in activity. I count 5 waves from the western Caribbean over to Africa. Two show decent chances of development, but still are classified as low to moderate development risks. I really like the easternmost wave at this point for the best development, but I can see at least 3 waves hitting depression or storm status. Most of them are modeled to head west into the Gulf, with 1 swinging northeast through the Atlantic. Development looks to be roughly a week out, though, of anything that will really need monitored.