A storm hit the Chicago grain markets late in the week ended August 10. But it wasn’t the kind that grain traders usually expect to rock their markets.
    This one came from Wall Street, which quaked and baked in the heat of worries about fallout from the subprime mortgage debacle. Even the Fed and other central banks got into the act, injecting billions into the banking systems in the U.S. and Europe — a move that for many just rattled more nerves.
    The fallout for grain markets took the form of whipsaw moves that seemed to fly the face of agricultural fundamentals — as wheat prices, for example, fresh off an 11-year high on Thursday and after bullish data from Friday’s USDA crop reports, saw huge opening losses at Friday’s CBOT opening. 
    Hedge fund selling, on fear and on margin calls elsewhere, was cited. So throw out the grain fundamentals.
    “Everyone had their eye on the stock market … there’s a lot of talk of funds liquidating positions,” said one floor trader on Friday morning.
    Weakness in world stock markets — Dow Jones blue chips were down as much as 200 points on Friday morning before grains opened, after falling more than 300 points on Thursday — set the tone. The Dow recovered some, ending 31 points lower.
    But both soybeans and wheat closed lower on Friday despite USDA’s friendly U.S. crop data issued before the CBOT markets opened. Granted, most of the “good” news was factored into prices. But stock market woes intensified the selling.
    On the other hand, corn — which should have fallen after bearish, bigger than expected USDA estimates issued on Friday — closed higher. But that also seemed the effect of big commodity funds exiting their positions — this time, short positions held on ideas of a record crop this Fall.
    Open interest in corn fell by roughly 50,000 contracts in the last three trading sessions of the week.
    The biggest factors traders will watch next week are:
    –Wall Street. Additional market woes connected with the U.S. subprime mortgage sector will likely press prices.
    –Midwest weather. Crops in the southern Midwest are baking in 100+ F degree days with little rain. Any relief could trigger a selloff. On Friday there were forecasts for the central Midwest looking milder, which weighed on soy prices.
    –European weather and export demand. U.S. and European wheat hit new highs this week with Chicago wheat notching an 11-year top of $6.80-1/2 on worries about a short EU crop due to harsh weather this growing season. In turn, the European feedgrain markets are rising, with traders keeping a close eye them for price direction for corn and soymeal.
    Government and industry numbers to be issued the week of Aug. 13:
    USDA releases weekly crop ratings on Monday. Traders expecting a 1-2 point decline in the good to excellent ratings.   The National Oilseed Processors Association will release its monthly July crush data on Tuesday.
    The last trading day of August soybeans, soymeal and soyoil is Aug. 14.