Commentary

Torrential rainfall in Brazil’s far southern state of Rio Grande do Sul state caused flooding and disruptions to the final stages of soybean and corn harvests. Grain traders the last few trading sessions point to excessive wet weather that is suggesting that with roughly a quarter of the crop remaining in the field, it could be subject to harvest and quality loss. Crop scouts suggest that we might be talking about roughly 125 million bushels of soybeans at risk of loss potentially, but that number could be revised significantly in either direction at this point. Meal and Soybeans matched each other penny for a penny today while the bean oil market traded negatively. With the funds short over 150K contracts, news that could subtract 5 to 7 million metric tons off of total production was a reason to short cover. The trade in my view received inflationary reactions following this week’s Fed meeting, and unemployment report. Now throw in a weather scare from the World’s largest bean grower, short covering was an easy choice heading into an uncertain weekend in my opinion. Technical levels for July 24 beans come in as follow next week. Support is first at 12.07 and then 11.97. A close under and its 11.68. If 1168 doesn’t hold its 1149. Resistance is at 1226 (March high) and then 1234. A close over both levels could push the market to 1247. A close over here and its 1280, the 50-week moving average.

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