Kleist Comments

MORNING GRAINS 7/2/14
MORNING GRAINS 7/2/14

Corn:
Exports: None Visible.
Comments: Is $4.00 (roughly) enough of a price drop to discount the currently robust crop and good pollination forecasts for July? Since the crop still needs to go through its critical stage it’s possible. However, we have to think beyond that to demand: weaker export sales; weaker domestic feed demand ala’ cattle on feed and Pig Crop reports; China’s import ban on U.S. corn/DDG. At worst could pull prices back down quickly on any recovery and at best cap the upside on any recovery. Speaking of China, apparently they will stop their heavy stockpiling program early next year and stocks were tabulated at 1/2 world carry numbers. Technically, yesterday might well have been ‘margin selling’ as open interest fell 7,000 between the N/U/Z contracts amid strong volume….maybe at least a sign a consolidation at hand ahead of the 4th of July holiday. By the way, I read where on the candlestick charts a ‘hammer bottom’ was formed yesterday? Del. 5.

SOYBEANS:
Exports: None Visible.
Comments: Good ole’ July beans getting likely support from, yes tight old crop supplies, but also ahead of tomorrow’s weekly export sales report? Ok by me: we need a corrective rally to sell in back months. Open interest suggested shortcovering to me with the total off 1,000 but U/Q/X off 8,000 combined (of course some margin call selling but the tilt seemed friendly very near term). And since the main crop weather concern now focused on August’s conditions, the rate of decline may slow. But except for a significant weather turn, the facts are in and prices will likely decline much further than from here…..recovery or not. November beans need at least a trip over $14.58-3/4 near term to stabilize the break. We look for an area to re-hedge. Speculatively as well.

Wheat:
Exports: Egypt buys 240,000t Russian/Romanian.
Comments: As mentioned, wheat’s recent beating allowing for a minor recovery/consolidation. Due its tendency to be a bit whippy, I look for any reason for a better or a significant recovery….none visible yet. Del. 51 here and 54 in KC.; open interest rose 2800 led by Sept. up 1600 amid good volume (bit of bottom picking?). Sept. needs a close or two over $6.00 in the big picture to suggest lows are in. Export demand says “doubtful”.

Kleist Comments

This is John Kleist, of Kleist Ag Consulting.
Questions? Email me: johnwkleist@sbcglobal.net

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