Grain Comments for 7-22-08

The grain markets gave us mixed trading today with wheat and soybeans trying to rallying and the corn market staying under pressure.  Last night’s trading and the opening calls indicated a positive day but the grain complex opened lower.  The bearish leader, corn, continued to play defense the entire session. 

As we make new recent lows on a daily basis in the corn, bullish traders are seating on the sidelines.  This market has experienced a heavy amount of fund selling from all their segments.  Open interest is decreasing which indicates liquidation of long position rather than new sellers.  The corn market is searching for a bottom.  The weather premium is gone as moisture events keep moving across the Midwest.  Estimates for this year’s corn yield are increasing.  This market will stage a rebound but the highs are in unless we see an early frost.  The northern states are behind development and vulnerable to an early freeze.  The market will address this issue after the August grain report.

Wheat futures have preformed well relative to the corn market.  Strong foreign demand is supporting the wheat trade.  The major part of the demand is in hard red winter wheat.  The Kansas City market should gain on the Chicago contracts.  Harvest is 71% completed.  Spring wheat condition improved 2% to 63%.  If the corn market can find a bottom, wheat futures will stage a rally.  Producers should consider replacing a portion of their cash sales.