I cannot recall the last time on a Monday morning update that I could say that grain and soy markets are all higher to begin the new week but here we are this morning with plus signs all across the screen. Prices did open slightly on the defensive but were able to snap back well, suggesting that shorts used the weakness as an opportunity to lighten the load once again. As with last week the wheat market appears to be leading the charge.
We do need to keep in perspective that as encouraging as the response was last week and now again this morning, there is nothing in the news that would suggest we are ready for a substantial rally at this point in time. At this point I have to believe this is basically a rebalancing of markets that had become too heavily loaded to the short-side for the time of the year. As the old analogy goes, the boat was listing so far to one side it was either going to capsize or we needed a number of people to rush back to the other side to balance out the weight and it would appear the latter has occurred.
We will have the normal lineup of reports issued today beginning with the export inspections but of more interest then in the afternoon, the planting progress and conditions. Undoubtedly, progress was slowed dramatically from the prior week due to frequent rains but the trade is expecting to see corn planted in the 85 to 90% range and beans upwards of 50%. The average for this time of year would be 76% and 43% respectively. Intermittent rains remain in the forecast for much of the Midwest through the balance of this week but then as we reach into the last week of the month and early June, less frequent rains and warming temperatures. If you were a corn or bean plant it would be hard to ask for a much better outlook. Overseas, weather also looks quite favorable as the major growing regions of Eastern Europe and the FSU are expected to see moisture.
As I commented initially, I have to believe that rallies at this time will be limited in both time and intensity as they appear to be stimulated by a desire on the part of the bear to lighten the load with the majority of the crop development risk on the horizon. This is not to say that something new and exciting could not develop as we balance the books but for now, I continue to believe we will be looking at generally sideways trade for the next 30 to 45 days.
(By Dan Hueber, source – http://www.agriculture.com/markets/analysis/corn/market-starter-will-grain-price-rally_9-ar48866)