Precious metals are again called lower here for the second day in a row
as Gold is down $2 to $1,419 with the USD gaining a bit of
steam.  Silver for May delivery in  fell $36.74 an
ounce.  Palladium for June delivery was down 0.4 percent at
$742.45 an ounce, taking its quarterly loss to 7.6 percent. Platinum
for July delivery declined 0.3 percent to $1,746.40 an ounce. Prices
are down 1.8 percent this quarter. (1) It looks as though the price is
starting to roll over in the precious metals department and I
suggest trying to sell a rally as prices float down on the news that
the conflict in Libya may soon be over.  If so these metals
will come down sharply.  Copper has also been under pressure
since that big rally it saw from $4.10 to $4.45.  This will
also keep getting hit and should start to trade below $4.30 soon.
Calls: On Monday traders saw a modest pullback with corn continuing to take it on the chin as relationships move into focus during planting. The lack
of fresh demand news from China, talked about all weekend, did not help
corn at all. Beans and wheat have plenty of incentive to rally against
corn especially in new crop beans with the SX-CZ spread sitting at
$7.45 showing modest recent strength but still well below the $8.00
level that the trade feels necessary for beans to gain acreage. Heading
into the USDA report on Thursday the market is looking at limited fresh
data with the HRW ratings taking another hit yesterday with TX ratings
down 3% on the week now sitting at 11% G/EX. This is still above the
record low of 4% G/EX but falling with no real end in sight. The SRW
ratings improved with IL showing a 12% jump now at 48% G/EX. This shows
the spread between SRW and HRW is widening...so should the price spreads.
KWN-WN is chopping on either side of $1.00 with a wider stance
expected. The Wheat spread is exasperated if you looked at getting long
KWN-CN in the past week. I feel the chart showed a major opportunity
with more available for late comers. This has widened from 156 to 181
in a few days with plenty more out there I think with HRW in decline
and the acreage numbers not expected to blow corn to the upside. On the
weather front, all talk of frost has abated with both Russia and China
looking at warmer temps for the rest of this week. No threat seen in
the HRW plains from temps looking 10 days out. There is a system moving
through the central US and delta dropping rains into the weekend
stalling early field work and adding to the early talk of high water
table levels north of St. Louis.

Looking at the USDA I have the following estimates to use as
guidelines:

                       
       
    Dec.
1     March 1
                              
           2010       2010
                                          
USDA       USDA
      
    Average   
Range       
   
Stocks     Stocks
Corn       
6.701    6.552-6.800  
   
10.040     7.694
Soybeans    1.295
    1.266-1.366  
   
2.277      1.270
Wheat      
1.399     
1.285-1.488      
1.928      1.356


                 
Average       
Range     2010 Seedings
Corn        
    91.662  
   
90.400-92.600     88.2
Soybeans    
    76.969   
   
75.000-78.500     77.4
All Wheat       
57.302    
56.500-58.400     53.6
Winter Wheat    
41.150    
   
40.500-42.900     37.3
Spring Wheat    
13.710    
   
13.000-14.310     13.7
Durum   
        
   
2.552     
   
2.400-2.800      
2.6

The numbers for stocks are expected to be slightly larger for beans due
to a smaller crush rate with many looking for an major increase in
ending stocks that I do not agree with. Yes, I agree that the census
and NOPA crush rates are lower than last year but any increase over
20-30 million bushels would be a shock and a great opportunity for
China to buy the dip. The US does not have enough in stocks to be
comfortable with any further old crop Chinese purchases. The corn
stocks number is little argued with my personal leaning to the lower
side on stocks. I think the old crop purchases by Mexico and a lack of
drop in Japan and S. Korea recently should stress tight stocks levels.
Look at where things were last year for an idea of how tight things
really are. I think the US still has a shockingly low stocks to use
ratio making any further sales of corn a major issue. No real shock is
expected from wheat stocks but if you break them down by class look for
an increase in white stocks and lower HRW stocks as the spread between
SRW and HRW widens.

Looking at the acreage numbers I have to ask, is this enough? With a
158 yield, not massive but a major improvement over last year, we
produce 13.37 billion corn and with a 44 yield for beans we can produce
3.318 billion. Comparing the corn to last year's usage, we are running
a negative yearly carryout...again. Comparing to last year's bean usage,
we run a negative carryout. This is with better yields that last year
and static usage. Since when has usage been static for the past 5
years? Why is no one worried that we may actually run out if these
average numbers come true. I am not getting ahead of anything but need
to realize just how tight things really are. The US does have a margin
for error but that margin is razor thin so planting, emergence and
development likely need to occur without any issue if the trade is to
remain calm. I believe any talk of delays will send all markets through
the roof heading into the hot part of the summer.

The feeling today is one of continued consolidation. There is nothing
out there to direct the trade specifically in any direction with palm
lower, cotton virtually flat and sugar modestly higher. Crude is lower
as risk premium is removed and volatility is reduced. RBOB is bullish
with stocks coming into focus. Gold is slightly lower pulling down the
whole precious metals sector lower. The general feeling is that markets
will be weaker than the overnight with limited fundamental information
to counter the slightly negative pull from macros and an overall
contracting feeling.

Beans are 2-4 Higher fading from overnight levels on negative outside
momentum and a lack of demand information. The 100-day MA sitting at
1353 is the pivot point for the day with the recent range low at 1338
offering modest support. Indicators are in the middle of the range in a
messy positive stance. Corn is called flat/mixed looking for support at
the 38% retracement level sitting below at 662. This matches the 75-day
MA on any break. Indicators are in the middle of the range in a mixed
stance. Wheat is called 3-5 Higher in CHI with KC 5-7 Higher and Minni
7-9 Higher. Protein spreads are again in focus. WK remains stuck below
the 200-day MA sitting at 745. This is the only important technical
upside achievement available. To the downside the market can fall to
the near term range low at 705.25 before finding any support.
Indicators are in a positive stance in the middle of the range. Meal is
called 1-2 dollars Higher looking to hold yesterday's low of 353.50. I
feel this is the only support seen on the chart right now with a
freefall available to the range low at 339.70. Indicators are negative
in the middle of the range. Bean oil is called Flat/Mixed looking to
hold the 100-day MA sitting at 56.07. Indicators are mixed to positive
in the middle of the range.

News:
Open interest shifted as follows: Corn -13886, Beans
-1519, Wheat +1339, Meal -902 and Oil +3842. Losses in corn attributed
to weak length leaving market following no fresh demand talk from
China. 

Following consecutive good harvests, India is looking at lifting their
multi year ban on export of wheat. The ban which is 4 years old could
be lifted next month. This would start with neighboring counties then
move into Asia.

China sold just over 100 TMT of their wheat auction which is about 30%
of expectations. Only 140 TMT of corn was sold versus expectations of
1.2 MMT. Both show that state prices in China are too high.



The HRW plains have missed a majority of the rains
over the central regions of the US in the past week and the near future
does not look good. There is one chance for rains across central KS
today and into tomorrow but that's it for the next 10-days. I will
watch accumulation maps for best direction heading into the weekend
following the USDA report. Above average temps moving into the region
coupled with expectations of high winds will not help any condition
ratings.

Argentinean weather remains warm and wet slowing harvest to a small
degree. Brazilian rains have moved south with another 1-2" expected in
the next 24 hours. Into the weekend the north and central regions dry
out a bit helping harvest.

Late plantings of double crop corn is Safrinha is expected to be at
least 6% lower than last year due to delays caused by untimely
rains. 

MACROS:
Are countering the small positive momentum traders
saw overnight. Cotton is leading the downside charge...follow at your own
risk. I think that is the most volatile market out there right now.
Crude is lower along with the Euro offering nothing positive at all.

Gold is trading 3.60 Lower sitting at 1,416.30.
Crude is trading .84 Lower sitting at 103.16 as of 8:25
CST.    
The Euro is .0015 Lower sitting at
1.4063.                  

The Yen is .66 Higher sitting at
82.39.      
July Cotton is trading 2.27 Lower sitting at 187.84, weakening
quickly. 
July Sugar is trading .10 Higher sitting at
25.06.     

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