September 9, 2011
By: Craig Haugaard, Grain Origination Manager
CORN: 3 higher
More pressure on the corn market yesterday as reports trickling out of Illinois seemed to indicate that the corn that has been harvested thus far is yielding better than expected. I spoke with a fellow in Illinois yesterday who told me that he had only had .40” of rain since late June and that in spite of that the field he has harvested averaged 175 bu/acre. It is still too early to tell if those kinds of yields will continue but for the time being the yields seem to be surprisingly good. That kind of antidotal story coupled with the world feed wheat surplus that we discussed yesterday kept the market under pressure for the day. As far as feed wheat goes there is a persistent story making the rounds that feed wheat from both Canada and the UK have been sold into the east coast and that rumor helped to pressure the markets as well. As we move towards the USDA report on Monday it is interesting to note that the average trade estimate coming into the report is for a national average yield of 149 bu/acre and a total production number of 12.519. This would give us a carry-out in the 640 area and would necessitate the need for some price rationing. Monday could usher in a new sense of direction for this market but for the time being the technical indicators are all issuing a sell signal and the Fibonacci numbers are showing minor support at $7.32 with more major support at $7.02 basis the December futures.
SOYBEANS: 6 higher
The average trade guess going into Monday’s report is for a production number of 3032. This is a number that, if true, will probably induce a great deal of yawning followed by more seasonal selling. Two of my three technical indicators are bearish and we have Fibonacci support at $13.96 in the November futures with resistance at $14.65. I have a hard time getting real excited about doing anything with this market until I see how the report comes out on Monday.
WHEAT: HRS 3 higher HRW unchanged
When I was a kid and my Mom would make a meal that I hated I would always get told that I should be grateful and eat it because there were starving kinds in (a) India or (b) China. While she seemed to vary between which country held the starving children at the moment it appeared that under her logic my eating food that I didn’t like was going to fill those emaciated little bodies and the youth of China or India would magically leap to their feet and joyously cavort around, world hunger having been ended because I ate the food that Mom was serving. Turns out that all that really happened was that I ate stuff I didn’t like and the kids still starved to death so I think I was had on that deal. Anyway, with that background I was a little surprised to see that India is going to export up to 2 MMT of wheat this year. Therein lays the problem with wheat. They grow a lot of it around the world and world stocks seem to be on the increase. We all know about the cheap wheat being offered out of the Black Sea region and now with places like India hitting the export market wheat prices may suffer. The one good thing that we have going for us is the drought in HRW country and at some point the trade will shift from what seems to be a world perspective back to a more parochial view of wheat and at that point we will rally. For now I expect that wheat will kind of move in tandem with corn and at the present time that direction seems to be lower. As mentioned yesterday, all three of my technical indicators have now turned bearish for both HRW and HRS. Monday may be a game changer but if not look for wheat to struggle.
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