Overnights Lower Monday Morning
The overnight grains are lower, despite US temperatures setting record August lows across large parts of the northern Midwest.
Instead the trade seems to be focusing on ideas that tonight's USDA crop report will show further improvement in condition ratings for corn and beans.
There could also be an element of month-end profit-taking on beans, although if anything will buck the trend it will be front-month September which is tighter than, erm well, a very tight thing.
For new crop though, I think you have to be bearish on beans, today's prices will only encourage large-scale planting in Brazil and Argentina. Reminiscent of what happened with wheat two years ago.
On the balance of probability the Argy drought must be broken sometime. Whilst El Nino might be a threat to Australian wheat, it could be just what the doctor ordered in South America and help break the drought in Argentina.
If it does then we are almost certainly looking at record production in Argentina this year, and potentially similar in Brazil. With beans at $10 compared to corn at only a little over $3 what would you plant? Especially given that input requirements for beans are so much less, and we know that your average Argy farmer isn't going to have a bank account bursting with cash after back-to-back wheat disasters and last season's awful soybean crop.
If you're still in doubt take a look at the charts on the widget, comparing wheat and corn with soybeans. It's clear which product has got out of sync with the others and is overdue a correction to get it back into line.
Corn now is starting to look reasonably priced with September currently at $3.20/bushel, surely a dip below $3 would be a buying opportunity?
For wheat there is a very strong seasonal trend for the market to rally at this time of year once the spring wheat harvest is in.
Instead the trade seems to be focusing on ideas that tonight's USDA crop report will show further improvement in condition ratings for corn and beans.
There could also be an element of month-end profit-taking on beans, although if anything will buck the trend it will be front-month September which is tighter than, erm well, a very tight thing.
For new crop though, I think you have to be bearish on beans, today's prices will only encourage large-scale planting in Brazil and Argentina. Reminiscent of what happened with wheat two years ago.
On the balance of probability the Argy drought must be broken sometime. Whilst El Nino might be a threat to Australian wheat, it could be just what the doctor ordered in South America and help break the drought in Argentina.
If it does then we are almost certainly looking at record production in Argentina this year, and potentially similar in Brazil. With beans at $10 compared to corn at only a little over $3 what would you plant? Especially given that input requirements for beans are so much less, and we know that your average Argy farmer isn't going to have a bank account bursting with cash after back-to-back wheat disasters and last season's awful soybean crop.
If you're still in doubt take a look at the charts on the widget, comparing wheat and corn with soybeans. It's clear which product has got out of sync with the others and is overdue a correction to get it back into line.
Corn now is starting to look reasonably priced with September currently at $3.20/bushel, surely a dip below $3 would be a buying opportunity?
For wheat there is a very strong seasonal trend for the market to rally at this time of year once the spring wheat harvest is in.