Morning Comments: 19th July 2011

Corn futures were under pressure for the entire session, the overnight grains were much softer on outside market pressure but the day session values held on well with weather problems in the US providing the fundamental support.

Chicago, Kansas and Minneapolis wheat futures all saw some downside but recovered well late in the session to finish much closer to unchanged than many had expected. All the major punters still tell me wheat has more downside potential than upside potential at the moment, larger world stocks and cheap Black Sea exports being the major bearish factors. It was good to see the premium wheat that is traded at Kansas and Minneapolis widen their spread to the soft wheat futures at Chicago.

US crop condition ratings came out after the close and had few surprises, although most had expected to see a 2% decline in US corn condition rating, a 3% decline in the report may raise a few eyebrows. The lateness of the US corn crop is probably the one thing that is helping it during this heat wave. Usually there would be up to 20% more corn silking than there is currently, the last thing grower want to see at silking is a heat wave, well US growers anyway.

Looking at the charts wheat is pretty much over bought so we should see some technical sellers hit the floor this week. European markets were all lower with corn and milling wheat at Paris leading the way, rapeseed was also lower but not as low as ICE canola which shed C$7.20 on the nearby contract. Crop conditions in the canola region of Canada are not too bad and with oilseed prices looking to take a hit after China revised soy imports lower we may well see some more downside in canola in the short term.

Look for a softer day with little interest from the buyer.

A low over the NSW central tablelands will drag in SE air over the region keeping temperatures and low and rainfall levels even lower. We could see a shower as the low cell moves off the coast tomorrow and pushes some rain up the hunter and onto the bottom of the plains. Winds will be strong to the east and persist until the weekend. Ten day model looks mainly dry, think 1972 or 1997.