Grain markets continued to dive during the week ending July 26. However, with a $2.365 break in price for corn, end users appear to be ready to book some needs. I would not disagree.
Corn has now deleted the weather scare of flooding out of the market as longs found the door and funds exited as well, because there was no more bullish news continuing to drive corn higher; talk of Commodity Futures Trading Commission controls on hedge funds and foreign speculation added to the emotion.
Corn, while it still can decline some more, appears to be fairly priced for now. A major portion of the crop is left to pollinate and with the crop two months behind, there still is plenty of time for some issues.
Flood damage
The U.S. Department of Agriculture will finish re-surveying 9,000 farmers on their acreage and the effects of the floods.
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In June, USDA estimated that harvested acres had declined by nearly 2 million acres and I suspect that number will grow, which adds to the importance of yields. While hot dry weather in August would speed the crop forward, it might also be detrimental to yields. Also, a hot dry August would set up the potential for an early frost in September. So, there should be better prices ahead. Be patient.
As the week draws to a close, trade appears to be covering short corn and selling soybeans. This could be the unwinding of spreads. While soybeans appear to have met targets the timing is not right. So, can we expect more weakness? Here, too, the weather conditions are ideal for soybeans except the dryness of the Delta. That area could use some good rain and there are a lot of soybeans planted in that region. The crush figures released July 24 were 140.9 million bushels for June versus 148.9 last year.
The May crush was revised upward by 2.2 million bushels. A decent increase for the revision. September through June cumulative crush was estimated at 1,533.3 million bushels and that is down from last year's 1,511.1 million bushels. Currently, USDA is estimating this year's crush at 1,840 million bushels. Therefore, the crush for the last two months of this marketing year needs to run at 306.7 million bushels versus 296.6 million bushels of last year. It may be that the crush gets revised downward in future reports?
Barclays Capital estimated during the week ending July 26 that assets under management in commodities at the end of June stood at $270 billion, up from the end of March estimate of $217 billion. Assets under management in Commodity indices are estimated at $175 billion. Of the $175 billion, $51 billion is estimated to be in exchange traded indices.
