October 18, 2011
By: Craig Haugaard, Grain Origination Manager
CORN: 9 lower
The problems in Europe will just not go away with Moody now telling France that their rating could be in jeopardy if they dont get their financial house in order. Greece is continuing to head over the cliff and it may just be a matter of time before it takes Europe with it. This has the dollar stronger this morning and may be contributing to the weakness in the grains. The harvest progress of corn was somewhat of a surprise last night as we harvested 14% of the crop last week to stand at 47% completed nationwide. While we are harvesting our crop they are putting it in the ground ion South America with Argentina reporting that 32% of the corn crop is now planted in that country. In other overseas news I see that China is selling some feed wheat out of their reserves but the expectations remains that they will still be looking to buy corn is we get a good dip in this market. On the domestic demand front ethanol is enjoying pretty good profits right now which have some traders talking about the possibility that we will see 5.2 billion bushels of corn used for ethanol production, which is up from the current USDA projections. The spread is illustrated on the following chart were the red line is the spot ethanol futures price and the black line is the spot corn futures price. On the technical side of things all of my indicators remain bullish at the present time. I continue to see significant support in the December futures at $5.75 with solid resistance at $6.52.
SOYBEANS: 23 lower
Let’s make this short and fast. Here is what I think you need to know about soybeans right now.
1) The export pace is slower than had been expected.
2) They are getting rain and have near ideal planting conditions in South America.
3) The September crush numbers were lower than expected.
4) Oil World is projecting that we will set a world record for the production of sunflowers this year.
5) The funds have been shrinking their positions.
6) The stronger dollar is viewed as negative to commodities.
7) The harvest pace remains strong with 69% of the crop now reported as harvested. This is 8% ahead of the historical average.
To be fair there are also some bullish scenarios out here, predominantly the idea that the national average yield is going to end up being lower than the current USDA projection. Nevertheless at the current time it appears as if the trade is focusing on the negative aspects of this market and unless something shifts that today we will probably see a lower session. Technically, two of my three indicators are bullish. I look for the $12.75 area to offer very solid resistance for now. I would sell against that level right now if I had any beans left to sell and expect the $11.52 area to provide major support to this market.
WHEAT: 9 lower
Winter wheat planting is proceeding with 73% of the crop planted. The five year average for this date is 77% planted and as has been the case all fall the lagging states remain Texas and Oklahoma. I think the story in wheat is basically unchanged where I would look for wheat to be capped a little bit by the cheap Black Sea wheat. I also still expect wheat to take its direction from corn as trades continue to view it in large part as a feed grain this year. Technically, this looks like a trading range kind of market and we may be heading to the lower portion of that range.
The information contained above was taken from sources which Wheat Growers believe to be reliable, but is not guaranteed by Wheat Growers as to accuracy or completeness and is made available for information purposes only. There is a risk of loss when trading commodity futures and options.