August 24, 2011
By: Craig Haugaard, Grain Origination Manager

CORN: 2 lower

The Pro Farmer crop tour is going on right now and the results that have come out thus far seem to be a mixed bag.  There are probably no real surprises with South Dakota yields pegged about where the USDA has us while in Nebraska they came up with an estimate that is below what the USDA is using.  In Indiana significant heat related damage is showing up and it is expected that the tour will find more stress related damage as they resume today.  I saw that one private analyst yesterday now has the national average yield pegged at 148.7 bu/acre.  If that were to be the case we would clearly need to ration demand.  The question then becomes, do we run the price up right away to kill demand or would it act more like it did in 1996?  That year we just kind of lollygagged along after harvest and around mid April had one of those, “Oh crap, we could run out of corn” revelations and took it high enough to ration demand.  Just for a blast from the past I am running the July 1996 chart today to remind you of what the price action was like that year.  I would argue that the trade will not get caught asleep at the switch this year and that we will see a much quicker reaction if in fact we need to price ration this crop.  The only other news that I thought was fascinating yesterday was a report from Oil World that corn acres in South America may be up sharply with a drop in bean acres.  Right now all of my technical indicators are bullish and as you know; our old buddy Fibonacci is telling us that the next significant resistance is in the $7.80 area.   

SOYBEANS: 3 lower

The Pro Farmer tour is finding poor pod counts in Nebraska and one private analyst yesterday lowered his national average yield estimate to 41 bu/acre.  The Oil World article was interesting and if correct will tighten up Western Hemisphere supplies.  Looking at the corn/bean spread right now the market is clearly telling you to plant corn over beans and apparently the folks to the south can do the math as well as we can.  Longer term that could create a very interesting situation in the bean market.  For now we are near the top of the trading range and while all of my indicators are still bullish they appear to be getting a little over bought so I would be careful up here.  If you still don’t have as many pre-harvest sales as you wanted to make this is probably a pretty darn good area to rectify that situation.

WHEAT: 6 lower

As you all know, lately this market has focused on the drought in the South West and the disappointing spring wheat yields.  I have mentioned that if the focus ever shifts to outside of the USA borders that we could see some pressure and that seems to have been what happened in the overnight session.   Talk this morning is of Russia where they are now expected to export up to 23 MMT, well above the 17 MMT that USDA has them factored in at and light years beyond the 4 MMT of last year.  We will also get fresh production numbers from Stats Canada this morning and the general feeling is that they will give us a number of around 23 MMT, up from the 21.5 MMT that the USDA is currently using.  Currently, all of my technical indicators bullish both HRS and HRW. 

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.