r e l a t i v e // strength

markets sunday, july 23, 2006

Corn and beans are weak based on perfect weather conditions. There is some persistent dryness, but rains last week provided significant relief... at least in traders' minds. As I look at the forecast on Sunday morning, I see that the extended forecast has "lost" a lot of the moisture that was there late last week. All of the sudden, a wet, mild week is shaping up to be warmer and dryer than expected. It'll be important to see how the market digests the changes tonight.

• Corn is approaching support levels in the high 240s basis the dec contract.
• Beans are approaching the key month of August. It should be a wild ride. Bearish fundamentals are hanging over the market, but there are plenty of bulls looking to push prices higher.
• Cattle could face pressure in the near term. Cattle on feed came in on 7/21 at 104% a year ago.
• Sugar may have further to go on the downside before moving higher.
• Dec cotton might be a good sell in the high 50s. The broad trading range seems to be low 50s to upper 50s.

Weather models in Europe and the US have not agreed for a while now. How this week plays out could be very important in determining the intermediate term movement of the grains. Corn will likely turn into a follower of beans as the key bean window is fast approaching.

posted by jared @ 8:55 AM