The USDA acreage report frequently has big surprises and this morning's version of the report was no exception! Corn acreage was 87.03 million, almost 3 million acres more than expected! Spring wheat was 13.77 million, almost 700,000 more acres than expected. Durum wheat acreage was 2.56 million, about 150,000 more acres than trade ideas while all wheat was 59.78 million, around 1.4 million acres more than trade estimates. Only beans were less than expected, 77.48 million, about 800,000 acres less than expected. Quarterly stocks were 4.266 million bushels for corn, about 80 million bushels higher than trade ideas. Beans were 597 million bushels, about 10 million bushels higher than thought while wheat was 667 million, in line with trade estimates. This report "found" several million of the "missing acres" from the March 31 Planting Intentions Report.

The early call is roughly 20-25 lower corn, 5-10 down in wheat and 5-10 up in beans. I suspect beans will not be up even that much as spillover selling from corn and wheat will restrain buying in beans. Of course, July beans (and July meal) are in their own universe and could continue going higher no matter what the rest of the floor does. Even if Jul goes lower, it should gain on the deferred months in both beans and meal. We are short all the grains except oats and I would stick with the short side today.

Link to this morning's full report (Report will open in a separate window)

The outside markets are a little higher in crude oil and equities while the $ index is a little lower but not enough to influence the grains significantly this am. It is the last trading day of the month and the quarter, which many traders think increases the fund's activity.

Deliveries were 6000 wheat and 5000 oil, both to June 29. There were no corn, bean or meal deliveries, as expected.

The Weekly Crop Progress Report yesterday afternoon showed winter wheat rated 45% good to excellent, unchanged from last week. Harvesting is now 40% done vs 46% average. Spring wheat rated 76% good to excellent vs 77% average. It is well behind normal in development due to late planting this spring with only 15% of the crop headed (a stage of development) vs 40% normally for this time in the season. Corn improved to 72% good to excellent vs 70% last week. Silking (a measure of development) reached 4% vs 8% average. Beans were rated 68% good to excellent vs 67% last week. Emergence hit 91% vs 95% average. Bean planting is now 96% complete vs 98% average. Beans blooming (a measure of development) reached 5% vs 10% average. Corn and beans are both behind normal in development due to their late planting caused by the cool, wet spring this season.

Taiwan is in Thursday for 82,000 tonnes of US wheat.

Dry weather is expected to continue stressing the Argentine wheat crop the next 7 days or longer. It is hot and dry in the North China Plain and more of the same is forecast the next 5 days or so, stressing corn and beans. The Indian monsoon continues to improve with more welcome rain sweeping north the rest of this week, at least. Welcome rain is forecast this weekend in parts of Russia and the Ukraine where it will help the outlook for the corn crop. However, parts of the wheat growing region of Russia will remain mostly dry the next 7 days, increasing stress on this crop.

The US southwest winter wheat belt will see good harvest weather until up to 1.5" rain arrives Fri-Sun which will once again slow harvesting. Only light, scattered rain is forecast in the Midwest the next several days, with moderate temps as conditions remain very favorable for corn and beans.

A slightly better start is expected this am, 3-5 wheat and steady/2 better beans but 2-4 down in corn, similar to overnight activity. Crude oil and the equities markets are a little higher while the $ index is steady/mixed this am, not enough to influence the grains significantly. The main activity today should be evening up and positioning ahead of the big USDA reports tomorrow am.

Open interest fell sharply in most pits Friday, perhaps reflecting some early evening up ahead of tomorrow's reports. Wheat open interest fell 7000 lots, corn dropped 23,000, beans were off 8000, oil lost 11,000 and meal declined 1000.

It appears Argentine President Fernandez lost control of the lower house of the Argentine Congress in mid-term elections yesterday. This could eventually result in agricultural policy changes, such as a lower bean export tax, long demanded by Argentine farmers.

Weekend rain fell in eastern parts of the Argentine wheat belt but the very dry western part of the belt had little relief as wheat continues to suffer from the ongoing drought there. The Indian monsoon finally advanced northward and is now only a few days behind normal, with improving rainfall. The director of India's government weather dep't said good monsoon rain is expected the next 7-10 days. June 1-24 monsoon rain was 58% below normal so improving conditions now are very welcome.

Some relief from hot and dry conditions was seen over the weekend in the southern part of the North China Plain and more scattered rain is forecast there the next two days. However, the north will remain hot and dry this week while the south will return to dry weather after tomorrow. This will further stress corn and beans in this region. Cooler temps are predicted this week in wheat and corn growing areas of Russia and the Ukraine but little rain is in the forecast during this time, increasing the need for moisture soon.

Generally favorable harvest weather is forecast for the southwest US winter wheat belt this week, allowing harvesting to catch up with a normal pace. The Midwest will see mostly dry weather and cooler temps this week after light, scattered weekend rains. The 6-10 day calls for cool and wet weather, a welcome combination.

No matter what happens in the market today, it will be forgotten at the close as traders continue to concentrate on the USDA numbers Tuesday am.---Vic Lespinasse

A slightly higher start is expected in most pits this am, roughly 2 in wheat, 1 in corn and 4-5 in beans. Old crop beans and meal could be the exception, starting roughly 10-15 better and $6-7 better, respectively, in Jul. The $ is weak this am, a supportive feature for all the grains. The equity markets and crude oil are lower but only slightly, not enough to be an influence in the grains at this time.

The trade averages are now out for Tuesday's huge USDA reports: corn acreage is forecast 84.06 million; beans 78.21 million; all wheat 58.29 million; spring wheat 13.10 million and durum wheat 2.40 million. The USDA will also estimate quarterly stocks as of June 1st: 670 million bushels of wheat; 4.184 billion bushels of corn and 586 million bushels of beans. The acreage numbers will directly impact new crop prices while quarterly stocks will influence old crop prices. Weekly meal exports have exceeded the 5 year average for the last 14 weeks in a row, reflecting ongoing strong overseas demand for US meal.

Technicals: Every day this week Dec corn has tested support at the $4 level, each time bouncing after failing to break below it. The bears will probably try to force Dec corn below this mark again today, figuring there are a lot of commission house sell stops underneath.

Generally favorable weather is likely to continue in the major US grain areas with good harvest weather in the southwest winter wheat belt and good growing weather in the Midwest and northern plains spring wheat, corn and bean areas. This will pressure wheat and new crop corn and beans today. Old crop beans (and meal) should find continued strong support from ever-tightening supplies amid ongoing strong demand. Expect old crop to gain again today vs new crop in beans and meal as a result.

The weather overseas isn't as favorable with numerous trouble spots: too hot and dry in the North China Plain, stressing corn and beans there. If this continues into Jul, this would hurt corn as it tries to pollinate. Hot and dry weather is forecast to persist into next week in parts of Russia and the Ukraine, stressing wheat and corn. Very dry weather is likely to continue in Argentina's wheat belt with only light, scattered rain expected Sunday. Due to this severe drought, Argentine farmers are expected to plant only 2.9 million hectares of wheat this season, the smallest planted area for wheat since record keeping began over 100 years ago. ---Vic Lespinasse

A mostly better start is indicated this am, roughly 5 up in wheat, 2-4 in corn, 3-5 in old crop beans and steady/better in new crop beans. (July and August are old crop, Sep forward is new crop.) Crude oil is a little lower, as are the equity markets while the $ index is a bit higher, a negative combination for all the grains. Malaysian palm oil jumped 86 ringgit on growing concern about the poor start of the Indian monsoon, which could force India to import more oil, both palm and bean.

The Census Bureau May crush was 146.1 million bushels, over 2.5 million bushels less than expected. Oil stocks were 3.195 billion lbs, 25 million higher than expected. Meal stocks were 594,000 tons, over 150,000 tons higher than expected. Given the lower than expected crush, oil and meal stocks should have been even lower than expected, not higher, meaning this report was more negative for the products than it at first appears.

Weekly export sales were good for wheat at 368,000 tonnes and meal at 80,000 tonnes old crop sales and 229,000 tonnes new crop sales. The rest were in line with 686,000 tonnes of old crop corn and 250,000 tonnes of new crop; 28,000 tonnes of old crop beans and 215,000 tonnes of new crop; and 7,000 tonnes old crop oil and 1000 tonnes new crop.

Egypt is in the market for optional origin wheat this am with results expected shortly before the grains open. Taiwan bought 58,000 tonnes of old crop US beans today.

Technicals: Dec corn has challenged the $4 level every day so far this week and failed to break below it, bouncing back each time. While the chart for Dec corn shows a big downtrend since the start of the month, there is strong support on the chart just above this $4 level. A growing number of traders are buying Dec corn around current levels with a sell stop just below $4, risking 5-10 cents on the trade.

The Indian monsoon remains about 12 days behind normal in advancing to the north. The Indian government says in the week ended June 24 monsoon rain was 68% below normal, raising concern about the crops since 60% of Indian crops depend on monsoon rains. Rain is forecast in Argentina's very dry wheat belt Sunday but only light amounts, not enough to do much good. The North China Plain has been hot and dry lately and more of the same is forecast the next several days. However, cooler temps and some rain is forecast early next week, which will be very welcome.

The US southwest winter wheat belt should enjoy generally favorable harvest weather the next week or so with only light, scattered rain. The Midwest will see scattered rain and hot temps the next several days, keeping conditions for corn and bean development mostly favorable. ---Vic Lespinasse

A day of consolidating prices is likely today. Overnight trading resulted in mixed prices by the 6am Central time close. (Remember, starting July 1 overnight trading will end at 7:15am Central time.) The outside markets are mixed with crude oil a little lower while the $ and equity markets are a little higher, at least as of this writing. There isn't a lot of fresh market moving news to drive prices sharply in either direction this am.

The big USDA acreage report is now less than a week away and trade averages for this report should be out by Friday.

The Senate Permanent Subcommittee on Investigations issued a report blaming index funds for the lack of convergence in the wheat market over the last year. The report said excessive index fund buying fueled the huge price run up in 2008 and that the Commodity Futures Trading Commission should clamp down on index funds, eliminating waivers on position limits and/or reducing position limits. The report said index funds held between 35-50% of the open interest in wheat since 2006. This report will not have any impact on the wheat market today or anytime soon. Longer term there could be some changes implemented by the CFTC but we will have to wait to see what they do.

Technicals: The wheat chart still looks like it is headed lower but corn and the bean complex appear to have put in a "spike" bottom a couple of days ago and look like they are headed higher now, at least in my view. However, I am a trend follower and need trending markets to make money. Lately the markets have been chopping around, higher one day, lower the next. Long live the trend!

Indian government officials warned that the monsoon, which 60% of Indian agriculture is dependent on, is likely to be below normal this season, about 93% of average for the 4 month season which started June 1. They said it is likely there will be an El Nino weather pattern this season, which is associated with below normal monsoons. A poor monsoon in India might lend long-term bullish support for US grain prices. Over the last few days the monsoon has started to make further progress to the north but it is still too far south for this time in the season.

Some badly needed rain is forecast this weekend in Argentine wheat areas but the driest parts of the belt will probably see the least amount of moisture. Some much needed rain is forecast in the dry parts of the Canadian Prairies the next several days. Crops remain about 2 weeks behind normal in the province of Alberta, according to government officials there. Up to June 18, less than half the normal rain had been seen in this province so far this season.

The southwest US winter wheat belt will see generally favorable harvest weather the next several days. The Midwest will see hot temps and scattered rain the next several days, a welcome combination in most parts of the belt. ---Vic Lespinasse

A lower start is indicated across the floor, around 10-12 wheat and corn, 15-20 beans, following similar overnight losses. Crude oil and the equity markets are lower while the $ is higher, a bearish combination for all the grains. Another major bearish influence for all the grains this am is the improving weather outlook in the main US growing areas. Some trouble spots remain elsewhere in the world, as usual, but with the possible exception of Argentine wheat, there is still time for conditions to improve in these areas outside the US. Malaysian palm oil fell sharply today, down 128 ringgit, a negative background feature for our bean oil market.

Stats Canada will put out their acreage estimates tomorrow am and the USDA will put out their acreage guesses June 30.

Technicals: All the charts now look bearish to me, including oil. Some pits, such as wheat and corn, have a strong downtrend in place, wheat due to improving harvest weather in the US, corn due to improving growing conditions.

Stress is likely again this week in Argentine wheat areas due to mainly dry weather at least the next several days. Northern Chinese growing areas will see more welcome scattered rain this week, keeping conditions there favorable. The central Chinese grain belt had beneficial rain early in the weekend but it has since turned hot and dry with temps reaching 104. More of the same is forecast until this weekend, when rain is forecast to return. The Indian monsoon is finally moving north but it is still 10-12 days behind where it should be at this time in the season. Rain and coverage have not been very good so far even in those areas that are seeing monsoon rain. Increasing rain is benefiting dry crops in western parts of the Canadian Prairies.

The northern plains spring wheat belt in the US is expecting scattered rain this week, which will be welcome now that the crop is planted. The southwest winter wheat belt had up to 1.5" widespread weekend rains, delaying harvesting. However, mostly dry weather is forecast this week and the 6-10 day calls for below normal rain, which will be welcome. The midwest saw up to 1.5" and hotter temps over the weekend. Scattered rain is forecast this week, along with continued hot temps. As long as the heat doesn't last too long and rain continues, this is considered a bearish weather pattern for corn and beans. ---Vic Lespinasse

A steady to mostly better start is expected this am following similar action overnight. The $ is a little lower while crude oil and equities are a little better, providing additional support for the grains this am. There isn’t much fresh news so far today. Informa will be out with their acreage guesses at 10:30 am, central time, which could modestly impact prices at that time. Expect to see the usual evening up or lightening up of positions later today ahead of the weekend.

Argentina will see very much needed rain the next 24-48 hours in their drought stressed wheat belt but the driest parts of the belt will get the least amount of moisture so additional rain will be needed again soon to improve conditions significantly. More beneficial rain is predicted in China’s main corn and bean growing areas the next few days, keeping condtions there favorable. Planting delays are expected to continue in much of India’s grain regions as the monsoon remains too far south for this time of year. Parts of the Ukraine and southern Russia’s corn and sunflower growing area have been hot and dry recently and more of the same is expected the next 7 days, increasing stress on crops there. Dry conditions are forecast to persist in western parts of the Canadian Prairies the next 5-7 days, increasing the need for rainfall there soon.

The US southwest winter wheat belt will see up to 1.5″ scattered rain today-tomorrow, causing some harvest delays. Generally dry weather is expected by Sunday through much of next week, allowing harvesting to speed up. The midwest saw widespread rain yesterday and more is forecast the next several days in the west but the east will have only light, scattered rain after Saturday. This rain is generally welcome except in areas that need to finish late bean planting and in areas where local flooding exists. ---Vic Lespinasse

A mixed start is indicated early this am by overnight trading and the lack of decisive direction from crude oil, the $ and the equity markets this am. I suspect, however, that prices will be mostly on the firm side when the opening bell rings if only due to mostly better than expected weekly export sales, especially in corn and the bean complex: 269,000 tonnes of wheat; a total of 1.143 million tonnes of corn (767,000 old crop and 376,000 new crop); a total of 251,000 tonnes of beans (146,000 tonnes of old crop and 105,000 tonnes of new crop); a total of 202,000 tonnes of meal (93,000 tonnes old crop and 109,000 tonnes of new crop); and 21,600 tonnes of oil. Included in the bean sales were 49,000 tonnes of old crop and 60,000 tonnes of new crop sales to China.

We are awaiting word on Egypt's tender for optional origin wheat, results of which should be out shortly before the opening. US wheat is still a bit too high to be competitive in the world market so we might not get much, if any, of this business. There is talk China bought 100,000 tonnes of Argentine bean oil for Aug/Sep shipment. India's Weather Office reported today that the monsoon, on which Indian agricuture is heavily dependent, produced 51% less rain than normal in the week ending June 17 and 45% less rain than usual from June 1-17. The monsoon remains too far to the south for this time of year. If this continues, it would very negatively impact Indian grain production this season.

Argentina is now expecting very much needed rain in parts of their very dry wheat belt the next few days, although the driest parts of the belt are expected to get the least amount of rain. Mostly favorable weather has been the rule recently in China's corn and bean regions with more of the same forecast the next several days. There is a growing need for rain in parts of the Ukraine and southern Russia, areas that produce corn and sunflowers.

The southwest US winter wheat belt will see some more harvest delays due to scattered rain but conditions seem to be improving overall. The Midwest has had a good deal of rain lately and up to 2" more is forecast today-tomorrow. This could cause some localized flooding and delay late bean planting in the east. Much warmer temps are forecast over coming days, especially in the southern half of the region.

Egypt cancelled their optional origin wheat tender this am.

The new crop corn/bean ratio (Dec corn/Nov beans) closed at 2.45-1 yesterday, its widest level in 15 months. It was only a few months ago that this ratio was slightly under 2-1, which encouraged farmers to plant corn at the expense of beans.

The USDA acreage report will be June 30 but Stats Canada will put out Canadian acreage estimates June 23, next Tuesday. Traders are looking for 24.6 million acres all wheat vs 25 million last year; 5.7 million acres durum wheat vs 6 million last year; 3.9 million acres oats vs 4.35 million last year; 9.4 million acres of barley vs 9.36 million last year and 15.5 million acres canola vs 16.16 million last year.

Remember, overnight grain trading hours will be extended to a 7:15 am central time close each morning starting July 1. ---Vic Lespinasse

A mixed to slightly lower start is tentatively expected this am. The early call is 5 down in wheat, steady corn and steady/2 better beans. The outside markets are mixed so they are not offering any guidance for the grains at this time. Traders will continue to watch them as the day progresses, especially the $, which could influence the grains significantly if it moves sharply either way.

Informa will put out their acreage guesses Friday at 10:30am, US Central time. The USDA acreage estimates, often a major influence on the market, will be out the morning of June 30.

There is a little talk China bought around 8 cargoes of South American beans so far this week, that's roughly 400-450,000 tonnes.

More unwelcome dry weather is predicted for the already severely-dry Argentine wheat belt the next several days or longer, making matters worse for the crop. More beneficial rain is forecast for China's main corn and bean growing areas this week. The Indian monsoon is starting to build strength and move north but it is still too far south for this time in the season. Welcome rain is now forecast over the coming week for the dry areas of the Canadian Prairies.

The US western Midwest will see up to 1.5" of welcome rain Thur-Fri with more possible Sun-Mon. The eastern half of the Midwest had up to 1.5" over the last 24 hours, which was welcome in areas planting is complete but not in areas that still need to finish planting. More is predicted Thur-Fri, up to 1.5" with yet more rain early next week. The southwest winter wheat belt will see light, scattered rain Thur-Sat but generally dry weather is predicted Sun-Mon and the 6-10 day calls for below normal rain, which will help harvesting speed up. The northern plains spring wheat belt will see light, scattered rain the next couple of days and again early next week. The 6-10 day calls for below normal rain.

We had a hugely profitable day Monday, a slightly profitable one yesterday and we hope to have another winning day today. ---Vic Lespinasse

Grain prices will be higher to start, roughly 5 in wheat and corn, 15-18 in beans, led by the weaker $. Lately, the $ has dictated direction in the grains and this pattern is expected to continue this am. Equities and crude oil are higher this am, providing additional encouragement for buyers in grains but the key to grain's direction is likely to come from the $ so watch this indicator during the course of the session for continued input.

Yesterday's weekly crop progress report didn't contain any big surprises with bean planting 87% done vs 92% average. Only 72% of the crop has emerged vs 83% average. Winter wheat harvesting remains well behind normal due to excessively wet weather in the southwest with only 9% of the crop in the bin vs 19% average. The condition of the crops is very good with corn rated 70% good to excellent vs 69% last week, spring wheat 75% vs 72% last week and beans 66% (their initial crop rating of the season) vs 56% last year.

The Australian Bureau of Agriculture and Resource Economics in their initial estimate of their 2009-10 wheat crop put the crop at 21.97 million tonnes vs 21.4 million last year. They guessed the canola crop at 1.7 million tonnes vs 1.88 millon tonnes last year.

The China National Grain and Oils Information Center, the official government think tank, estimated Chinese bean imports in the 2009-10 crop year, which starts Oct 1, at 37 million tonnes vs the estimated 40 tonnes of imported beans this year, 2008-09, which ends Sep 30. They said bean imports will fall in the coming year as the government is expected to release some of their approximately 7 million tonne bean reserves into the domestic market. Bean oil imports are forecast to remain unchanged at 2.3 million tonnes in the 2009-10 year.

Technicals: The daily bar charts all look bearish now, the reason I am short all the grains.

More dry weather is predicted in the already very dry Argentine wheat belt the next several days or so, further stressing the crop and delaying planting. India's monsoon remains weak and further to the south than normal for this time in the season, delaying bean planting there. Continued dry conditions are stressing crops in western Saskatchewan and central/northern Alberta provinces, two of Canada's main grain growing regions.

More harvest delays are predicted in the US southwest winter wheat belt with up to 1.5" scattered rain overnight. However, only light scattered rain is forecast the rest of this week and the 6-10 day calls for below normal rain so harvesting should make good progress in the days ahead. The Midwest saw up to 1.5" of scattered rain the last 24 hours and more of the same is forecast the next several days, up to 2" in the east, up to 1.5" in the west. Dry weather is forecast this weekend. All this rain is welcome except in areas that still haven't finished planting.

A lower to sharply lower start is forecast this am following big overnight losses. The $ is higher this am while crude oil and the equity markets are lower, a bearish combination for all the grains. Malaysian palm oil fell 65 ringgit today, a negative influence for our bean oil market.

The National Oilseed Processors Association May crush was 142.2 million bushels vs expectations of only 137.2 million. Oil stocks were 2.684 billion lbs vs ideas of 2.690 billion. These numbers are friendly for beans as well as oil: Beans because the crush was several million bushels more than expected, oil because with a larger crush, oil stocks should have been higher than expected, but they were actually a shade less than expected.

Argentina's Agriculture Secretary said rain is desperately needed in their wheat belt for planting and development of the wheat crop.

I recommend switching positions TODAY from Jul in wheat to Sep, from Jul in corn to Dec, in beans from Jul to Nov and in the products (meal and oil) from Jul to Dec. You can do this at anytime today between the opening and the close. It would probably be a good idea to do it SOONER rather than later but do it today.

Technicals: The daily bar charts all became bearish Friday (if they weren't already) with the exception of meal, which remains bullish looking for now.

Despite the very strong need for rain, there is little in the forecast for Argentina's very dry wheat belt the next 7 days or so, stressing the already planted crop and delaying new planting. Argentine wheat acreage is forecast to be the lowest ever as a result of this terrible drought.

India's monsoon is further south and weaker than it should be for this time of year, something that the market will watch with increasing interest if this trend continues. There is a drying trend in parts of the Ukraine and southern Russia the last few weeks, another area to keep an eye on. North China's grain belt is forecast to get beneficial rain this week. Central Chinese grain areas are hot now but welcome rain is forecast later this week. Rain is needed but not forecast in western Saskatchewan and Alberta provinces, two of Canada's main grain producing areas.

In the US Midwest, widespread rain is likely much of this week, welcome in areas that are planted but not in areas of the east that still need to plant beans. The southwest winter wheat belt had weekend rains and more is predicted today as well as later in the week, delaying harvesting of the crop. The northern plains spring wheat belt will see rain the next few days, which is welcome except in areas that still need to finish late planting. ---Vic Lespinasse

A lower start is dictated this am by the much higher $ along with lower crude oil and equity prices. Lower prices were seen overnight and similar results are likely on the opening: 10 lower wheat, 2-4 down in corn and 1-3 off in beans. Yesterday, the weak $ helped lift grain values but today's very strong $ will probably depress values throughout the session. However, notice overnight Jul still gained on Nov in beans while Jul still gained on Oct and Dec in meal so the bull spreads continue working in these pits. This is a bullish signal for these markets.

Jul/Nov beans traded at a new high for the move yesterday, 193 3/4, before setting back to end at 177 1/4. Some traders think this spread could eventually trade out to $3 inverse (premium) Jul over Nov.

Dry conditions are increasing stress on Canadian crops in Saskatchewan, Canada's largest grain producing province, and Alberta, another large grain producing province. Cold temps have delayed crop development so far this season with crops now estimated roughly 10-12 days behind normal. This could make them susceptible to damage from an early frost this year.

The USDA announced this am that South Korea bought 275,000 tonnes of US corn for the 2009-10 crop year, which starts Sep 1. Argentina is largely absent from the export market for beans and products, opening up opportunity for other exporters and reports indicate Chinese crushers will export 200-300,000 tonnes of meal each month during Jun-Aug, many times the size of their exports during these same months last year.

Technicals: The daily bar charts still look very bullish for beans and meal, bearish for wheat and oil with corn in a two-sided trading range. If the bean and meal bull spreads keep working in what might well be a down day today that would offer further support for the bull cause in these pits.

Argentine wheat areas will suffer through several more days of dry weather but there is a chance of much needed rain late next week. Rain is predicted to continue in north Chinese corn and bean fields next week, keeping crops there in good shape. Central Chinese grain areas will be hot and dry for a few more days but there is a chance for beneficial rain starting mid next week. Dry weather is forecast to continue in parts of Canada's grain producing provinces through next week, building stress on crops there.

The eastern US midwest saw up to 1" scattered rain yesterday. Only light, scattered rain is forecast the next few days, followed by better rain chances early next week. ---Vic Lespinasse

A higher start is likely this am, 5 in wheat and corn, 10-12 in beans. The $ index is a little lower this am while crude oil is a shade better and equities are a little weaker. These outside markets will not be a factor for the grains this am unless they move sharply from their current levels.

Weekly export sales were good for wheat at 354,000 tonnes, and corn at 713,000 tonnes this crop year and 150,000 tonnes next crop year. The wheat crop year starts June 1. The weekly export sales report this am showed wheat sales of 985,000 tonnes but 631,000 tonnes of this was carried over from the old crop year, which ended May 31, to this crop year, making actual wheat sales 354,000 tonnes. Bean sales were minus 61,000 tonnes this crop year due to cancellations, and 280,000 tonnes next crop year. The next crop year for corn and beans starts Sep 1. Meal sales were in line at 70,000 tonnes old crop and 50,000 tonnes new crop. Oil sales were good at 6800 tonnes old crop and 3500 tonnes new crop. The new crop year for the products starts Oct 1.

South Korea passed on their tender for 275,000 tonnes of meal due to high prices.

Technicals: The daily bar charts still look very bullish for beans and meal, both of which have strong uptrends in place. Wheat still looks bearish, as does oil, while corn's chart could be viewed either way; it might be in a period of consolidation.

The outlook for the dry Argentine wheat fields remains unfavorable with more dry conditions forecast the next several days or longer, continuing to build stress for the crop. Good coverage of up to 1.5" rains was seen in northern Chinese corn and bean fields the last few days, benefiting crops there. Central Chinese growing areas will be mostly dry the next several days but rain is forecast by about Tuesday next week, which will be very welcome.

The southwest US winter wheat belt had up to 1.5" of rain yesterday and up to 1.5" more is forecast today-Saturday. Additional rain is forecast early next week. All this moisture will slow harvesting of the crop. The midwest will see light, scattered rain the next several days, extending into early next week. The eastern half of the belt had up to 1.5" overnight with more scattered around the region today-tomorrow. Additional rain is forecast early next week, all of which will keep late bean planting slow.

Crude oil and the equity markets are higher this am, which is supportive for the grains. The $ is about unchanged, not influencing the grains either way at this time.

The USDA report was considered neutral to friendly overall and the early call is 2-4 better wheat, 4-7 up in corn and 5-8 higher beans. Most of the important numbers are in the tables but some other salient figures not included in these tables are: a lower corn yield guess of 153.4 bushels per acre vs 155.4 previously; no change in the amount of corn to be used to make ethanol in either the 2008-09 crop year, 3.75 billion bushels, or the 2009-10 crop year, 4.1 billion bushels; and no change in the amount of bean oil used to make biodiesel fuel (methyl ester), 1.75 billion lbs in the 2008-09 crop year and 2.2 billion lbs in the 2009-10 crop year.

Jul meal made a 10-month high yesterday amid talk it might be necessary to import small amounts of South American meal into the US this summer. Meal supplies are already tight and they are expected to become even tighter, reflected in the strong inverse (premium) of the nearby months to the deferred months. Some traders think Jul or Aug will eventually trade at a $100 premium to Oct or Dec, as it has done before on rare occasions when meal supplies were extremely tight. Similarly, some traders think Jul or Aug beans will eventually trade at a $2.00 or more premium to Nov. If you are a spread trader, you might want to bull spread either of these markets but beware, these old crop/new crop spreads can be very volatile.

Technicals: In my view, the daily bar charts still look bearish in wheat and oil, bullish in corn, beans, meal and oats. Beans and meal look especially strong with both these pits making new highs for the move yesterday.

Argentine wheat areas are forecast to stay mostly dry the next 7 days, further stressing the crop.

The US southwest winter wheat belt will see more rain in the north the next few days, up to 2". Harvesting hasn't reached this far north yet so rain shouldn't be a problem for now. The midwest will see more rain in the west today, up to 1.5" and additional rain is forecast this weekend, which shouldn't be a problem as planting is finished. The east will see rain the next two days mainly in the southern 2/3rds of the belt, delaying bean planting. More unwelcome rain is forecast this weekend. ---Vic Lespinasse

Grain prices are expected to start higher this am, roughly 5 in wheat and corn, 5-10 in beans. The $ index is lower this am while crude oil and the equity markets are higher, a bullish combination for all the grains. Dalian, China bean futures were lower again today amid talk the government would release beans into the domestic market from their stockpile perhaps within a few weeks.

The USDA June crop report will be out tomorrow am and there will be a fair amount of evening up today ahead of this report.

The Crop Progress Report yesterday afternoon showed 78% of the beans have been planted vs 87% average. Corn is 97% done against 99% average. Spring wheat is 96% complete vs 100% average. Emergence is 87% in corn vs 94% average. Beans are 55% emerged vs 70% average and spring wheat is 84% vs 97% average. Winter wheat harvesting reached 5% done vs 10% usually by this time in the season. Corn rated 69% good to excellent vs 70% last week. Spring wheat was 72% good to excellent vs 73% a week ago. Winter wheat came in at 44% good to excellent vs 45% last week.

Technicals: My reading of the daily bar charts suggests beans and meal are still headed higher as both these markets made new highs for the move yesterday with beans scoring a 9 month high. Wheat, corn, oil and oats, however, look like they turned bearish, at least for now. Of course, markets, like the weather, can be mercurial so we will be ready to change positions again on the close today, depending on market action. We never stay married to any position.

Argentine wheat areas are forecast to stay dry the next 7 days or so, stressing the crop. Chinese corn and bean areas have benefited from recent rain and are in good shape for the time being but more rain will be needed, of course, over coming weeks and months to keep the crop outlook favorable.

The US southwest winter wheat belt could see up to 1.5" of scattered rain today with more over the weekend. The 6-10 day calls for wet weather in the northeast part of the belt. All this rain will slow early wheat harvesting. The Midwest will see rain today but dry weather is predicted the rest of the week. The eastern half of the belt will have up to 2" scattered rain Wed-Thur, with more forecast over the weekend, delaying late planting.---Vic Lespinasse

A lower start is expected this am across the floor, similar to overnight losses. The $ index is higher while crude oil and the equity markets are lower, a bearish combination for all the grains. The early call is 10-15 down in wheat, 5-7 lower corn and 7-10 off in beans.

China's Commerce Ministry lowered its estimate for Chinese bean imports in May from 4.29 million tonnes to 3.96 million but they raised their May/June import guess from 8.4 million tonnes to 8.58 million, suggesting importers might defer some shipments from May to June. Brazil's Agriculture Ministry lowered their 2008-09 bean crop guess from 57.6 million tonnes in May to 57.1 million. They cut their May corn crop guess of 51.4 million tonnes to 49.9 million.

Wednesday morning the USDA June crop report will be out. I will have trade averages for this report shortly. Of course, the main USDA report this month will be the planted acreage estimates on June 30, which could move prices sharply that day.

Technicals: in my view, the daily bar charts all look bullish with the exception of wheat, which looks bearish. Last week, wheat ended lower for the week while all the rest of the grains finished the week higher. I am using technical analysis to evaluate these chart patterns. I am short wheat, long everything else this am.

Continued dry weather is forecast for Argentina's wheat belt this week, continuing to stress the crop. Much needed rain fell in the North China Plain over the weekend and welcome rain is predicted in northern Chinese growing areas this week, all of which will greatly benefit corn and beans in these two major growing areas.

The US northern plains spring wheat belt had up to 1" of unwanted weekend rain with more forecast today-tomorrow. Dry weather is forecast the second half of the week but the 6-10 day calls for above normal rain. The Midwest had up to 1.5" of rain in the west over the weekend with up to 1.5" forecast the next 3 days. Coverage should be widespread. More rain is possible late this week, all of which is welcome. The eastern half of the belt saw up to 1.25" over the weekend in the north with up to 1" more expected today. Up to 2" more rain is forecast Tue-Wed and none of this is welcome as farmers race to finish late corn and bean planting. The 6-10 day calls for above normal rain. ---Vic Lespinasse

A lower start is expected this am, around 3-5 in wheat and corn, 5-8 in beans. Crude oil and the equity markets are higher this am but so is the $, sending mixed signals to the grains. Funds keep piling back into the grains in a big way swelling open interest across the floor: 9000 higher in wheat yesterday, 10,000 in corn, 7000 in beans, 5000 in meal and 6000 in oil, for example.

The China National Grain and Oils Information Center, a government-linked think tank, is reporting Chinese crushers are now operating at a loss due to sharply higher imported bean prices.

The US Climate Prediction Center, a division of the National Oceanic and Atmospheric Administration, is saying an El Nino weather pattern could develop within weeks and persist from June through August. This could cause a drought in Australian wheat areas and disrupt normal weather around the world. Abnormal weather is almost always bullish for grain prices as it cuts grain production. Earlier this week,the Australian Bureau of Meteorology warned there is a better than 50% chance for an El Nino developing, if present weather patterns continue.

Goldman Sachs will start spreading their long positions in Jul wheat, corn, beans and oil forward today into deferred months, which could put some pressure on Jul. This process will finish on Thursday next week.

Informa is expected to put out crop guesses at 10:30am US Central time today ahead of the USDA report next Wednesday. Trade averages for the USDA report should start coming out later today.

Technicals: The wheat chart still looks bearish to me but the other charts all look bullish again. If the market continues reversing direction as it has done the last two days, trend followers like me look for the market to resume trending so that we will do well again.

Rain continues on the light side in major Chinese corn and bean areas and IF this pattern continues it will become a very bullish influence on US grain prices. Argentine wheat areas are forecast to remain dry the next week or so, further stressing the crop.

The US northern plains spring wheat belt will see up to 1.5" unwelcome weekend rain. The 6-10 day calls for wet weather also, which will keep late planting slow. The Midwest will see weekend rain, especially in the north, delaying late planting efforts in the east. The 6-10 day calls for more wet weather. ---Vic Lespinasse

Vic has taped two interviews with Agriculture.com's Mike McGinnis to appear Friday and through the weekend. Visit Agriculture.com and look for AGOL-TV videos on the home page.

A higher start is expected in all pits this am, roughly 10 in wheat and beans, 5 in corn. Crude oil and the equity markets are higher while the $ is a little lower, a friendly combination for all the grains.

Weekly export sales were in line for meal at 142,000 tonnes and wheat at 88,000 tonnes for the old crop year, which ended May 31, and 177,000 tonnes this crop year. The rest were slow: 604,000 tonnes of corn, minus 24,000 tonnes of old crop beans due to China cancelling 113,000 tonnes, only 60,000 tonnes of sales for the next crop year, starting Sep 1; and 3900 tonnes of oil. The Chinese cancellation was widely-anticipated and is already mostly in the market. The monthly oil stocks report this am showed 94 million lbs of bean oil was used to make bio diesel fuel in April down from 103 million lbs in March.

Some traders think yesterday's sell off was overdone like the weeks-long rally that preceded it. This could give the market a knee-jerk reaction to the upside today.

Technicals: In my view, the daily bar charts all turned bearish yesterday and I switched to the short side in all pits. Keep in mind I am a trend follower so when the market trends in either direction I do well but when they chop back and forth, higher one day, lower the next, etc, I, along with most trend followers, get beat up. I gave back a lot of profit in yesterday's huge sell off but still took substantial gains out of some pits, especially beans.

The western corn belt will stay mostly dry the next couple of days. Up to 2" or rain is forecast Sat-Mon. The eastern corn belt had up to .6" scattered rain yesterday. Mostly dry weather is likely the next few days but up to 1.5" of rain will return to the region Sun-Tue. This will be unwelcome as it will slow late planting of corn as well as beans. The 6-10 day calls for cool, wet weather, an unwelcome combination. The northern plains spring wheat region will be mostly dry the next couple of days but up to 2" of rain is likely Sat-Mon and the 6-10 day calls for cool, wet weather, which will be unwelcome. ---Vic Lespinasse

A lower start is expected in all pits, around 10-15 wheat, 3-4 corn and 7-10 beans. Crude oil and the equity markets are lower while the $ index is higher, a bearish combination for the grains. It is looking increasingly like the market is undergoing a technical correction after making eight month highs in several pits recently. The increasingly widespread thinking that prices are overbought and overdue for a correction, or at least a period of consolidation, is likely to make sellers out of many specs, either to liquidate longs or initiate new short positions, which could put a lot of pressure on the market today. There isn’t a lot of fresh news this am.

Australia’s Bureau of Meteorology is now predicting a better than 50% chance of an El Nino developing by July, more than double the normal chance. El Ninos are associated with drought conditions in Australian wheat areas. Ukraine’s Agriculture Minister cut his estimate of the 2009 grain crop from 48 to 42-43 million tonnes due to a freeze in April. Last year the crop totaled 53.3 million tonnes. Private analysts think the 2009 crop will only reach 39 million tonnes.

Technicals: The daily bar charts still look very bullish with strong uptrends in place. However, no market goes straight up and, after reaching 8 month highs in several pits recently the grains are probably in need of a pause or correction, the only question being how much. I still would not try to anticipate any turn to the downside, greatly preferring to wait until the charts show at least the start of a downtrend before getting out of our long positions, several of which we have huge profits in. For example, we are long Jul beans from roughly $11.11 and Jul wheat from about $5.97 so even a sell off today will still leave large profits. If the market somehow recovers today we want to continue riding the bullish wave so I would wait until the close before deciding whether to exit longs or reverse to the short side. ---Vic Lespinasse

A lower start is likely in most pits this am, roughly 3-5 in corn and beans, 7-10 in wheat. Many traders, myself included, think we overdid it to the upside yesterday and we are due for a correction to the downside today. Frequently, when the market makes a big move on Monday, it gives back part of the move on Tuesday, the "turn-a-round Tuesday" syndrome. Not just the grains but crude oil and the equity markets, which posted big gains yesterday, are lower this am and there weakness could add additional pressure to the grains this am. There is one consistent pattern from yesterday, however, and that is the $, which continues lower this am, a bullish influence for the grains.

Open interest continues climbing sharply in some pits, up 25,000 in corn and 9000 in wheat yesterday, probably reflecting new fund longs in these markets. Open interest was higher in the bean complex too but not as sharply.

The Weekly Crop Progress report showed corn planting as expected, 93%, vs 97% average. Bean planting was at the low end of trade ideas, 66% vs 79% average. Spring wheat is 89% planted vs 98% average. Emergence reached 73% in corn vs 86% average, 36% in beans vs 51% average and 67% in spring wheat vs 90% average. Winter wheat was rated 45% good to excellent, unchanged from last week. Corn was rated 70% good to excellent in its initial weekly rating. Last year it was 63% good to excellent initially.

Technicals: The daily bar (high, low, close) charts look bullish with new highs and/or new high closes for the move seen in all pits.

There is some growing concern about dry weather in northeast China, the major corn and bean growing area of the country. Heilongjiang province, which alone produces 40% of China's bean crop according to the Agriculture Ministry, is on the dry side as is much of the region. China's State Flood Control and Drought Relief Headquarters said 45% of the area is affected by drought conditions, threatening both corn and beans. If this situation persists, it would be very bullish for grain prices. However, the forecast this am finally shows some much needed rain in northeast China this coming weekend. The market will keep watching developments in this area closely over coming days.

Argentine wheat areas are forecast to stay dry the next week or longer, stressing the crop there.

Here in the US, the northern plains spring wheat belt will stay dry today-Thursday with rain possible Fri-Sun. The southwest winter wheat belt saw up to 1" of scattered rain yesterday with up to 2" forecast today as well as late this week. The Midwest saw up to 1.5" scattered rain yesterday. Up to 1 1/4" more is forecast the next two days before dry weather returns the second half of the week. More rain is possible this weekend and the 6-10 day calls for wet weather. All this rain is welcome in the west but it will continue to keep planting slow in the east.

A higher start is indicated in all pits by overnight gains, roughly 10-15 wheat, 5-7 corn and 15-20 beans. Malaysian palm oil gained 65 ringgit today and the Dalian, China grain market reopened with strong gains in all pits after being closed for a holiday Thur-Fri. The $ index is lower again this am. Losses in this index Friday helped drive grain prices higher and could easily do so again today. Crude oil and the equity markets are posting strong gains this am, which should provide further support for the grains. Strength in these outside markets is thought to suggest the US and world economies are recovering, which should boost demand for grain.

The funds appetite for grains continues to grow, illustrated by the continued gains in open interest: up 6000 each Friday in wheat and beans, 15,000 higher that day in corn. This continuing increase in fund buying helped lift wheat prices 14% in May with corn and beans up 7%. There was talk last week that China had cancelled some cargoes of US beans and that talk continues this am with Chinese traders saying 2-3 cargoes, about 110-165,000 tonnes of beans, was sold back into the US market following the recent steep price rise. Note that despite this talk, bean prices still jumped sharply overnight, suggesting this cancellation talk was already discounted by the market.

South Korea was in the market for 100,000 tonnes of optional origin meal but they cancelled the tender due to too high offered prices.

The weekly crop progress report this afternoon is expected to show corn planting of roughly 92-94% vs about 98% average. Bean planting is tentatively expected around 65-75%. The initial condition rating for corn is expected this afternoon but it is still too early for beans.

Technicals: The daily bar charts (high, low, close) still look very bullish, especially for wheat and corn, both of which made new high closes for the move. Oil, the one market that had a downward slanting or bearish chart pattern, had a huge rally Friday due to massive unwinding of meal/oil spreads, making the oil chart look bullish if Friday's rally can be sustained today.

Rain in northern Argentine wheat areas was welcome over the weekend but dry weather prevailed in the south and the forecast calls for mostly dry weather across the wheat belt the next 7-10 days, stressing the crop there. More rain would be increasingly welcome in China's main corn and bean growing regions, including the big bean province of Heilongjiang, after a drier than usual May. Welcome rain is forecast in parts of Australia's wheat belt the next few days, especially New South Wales state.

The US northern plains spring wheat belt will remain mostly dry this week, allowing late planting to proceed. The Midwest will see up to 1.5" of rain in the west the next few days with the second half of the week generally dry, helping keep crops in good shape. The eastern half of the belt will see up to 1.5" of rain today-tomorrow, slowing planting efforts further. Dry weather is forecast the second half of the week. ---Vic Lespinasse