Closing Grain Markets:

• The 2012 weather market in grains seems to be back in full-force as we started the trading week, with the corn the natural leader to the upside…as several contracts went limit-up and saw over 7% gains during the trading session. As we closed-out last week’s trade, the trade seemed more focused upon weak demand & the upcoming acreage and stocks report later this week; however, with lack of rain over the weekend, increasing heat stress, and the simple fact that the early corn crop is shooting tassels, the trade has once again returned its focus to declining supplies and the more short-term report of the weekly crop conditions report coming-out late Monday afternoon from USDA. In a nutshell, even with outside markets faltering, the corn futures trade seems now to be trying to price-in a potential 2012 yield well below USDA’s 166 bu/acre.

• Beans and wheat were followers to the corn on Monday’s trade; wheat saw more buying on spillover from the limit-up corn, while the beans in November were only about 3% higher on the session, as mid-day weather models suggested a flattening-out of the ridge next week. Whereas this seemed to take the shine off of beans some, the corn market probably wanted to keep premium built-into the price ahead of the crop conditions report. I would also suspect that some bean/corn spread-unwinding may have been working its way into Monday’s price action as well.

 

Closing Livestock Market:

• Friday’s cattle on feed coupled with the sharply higher feed-grain market brought the bears into the livestock markets on Monday, with feeder cattle leading the declines. With the corn limit-up, the feeders shot limit-down in reaction to the sharp rally in corn, and in addition I doubt whether the feeder cattle traders were ready to see 2.01 Mln. head of cattle placed on USDA’s Friday afternoon report.

• The sharply lower feeder trade spilled-over into the live cattle, and by the end of the trading day on Monday it also spilled-over into the hog complex as well—with the July Hog breaking below last week’s lows as well as its 10-day Moving Avg. I would guess that below these points were some sell-stops.

 

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