September 28, 2011
By: Craig Haugaard, Grain Origination Manager
CORN: 7 lower
I am not sure what to lead off with this morning so I am going to go with the stuff that might matter down the road but that nobody probably cares much about right now. On Friday we will get the latest USDA Grain Stocks report and the average trade guess is that the report will have corn stocks (as opposed to stalks) at 962 million bushels. The conventional wisdom is also that we will see the report indicate a reduction in the use of corn for feed. Now, on the stuff that everyone is talking about, i.e. the harvest, the trade is continuing to be bombarded with stories of better than expected yields. The exception to this seems to be Indiana right now where yields reports thus far are disappointing but the reports coming out of Illinois, Iowa and Nebraska has for the most part been better than expected. Since the trade was expecting disappointing yields and had the futures prices adjusted accordingly this steady stream of better than expected reports is weighing on the market. Toss in what appears to be good harvest weather and I would look for the pressure to continue today. Adding additional pressure may be the outside markets as we have the dollar higher and crude oil lower this morning.
My technical indicators are all currently bearish and this is feeling like a market where traders are more likely to sell rallies than to buy dips. If you have corn that you still need to sell at harvest time, selling rallies might not be the worst idea for you either.
SOYBEANS: 9 lower
The yield reports on beans have been much better than expected. That is rather odd since this is the worst rated crop since 2003 but for now beans seem to be shrugging off that dismal rating and are producing great yields anyway. As we move into Friday’s report I see that the trade is expecting a stocks number to come in at 225. We are sitting at a spot where we probably don’t need to see any price rationing with this crop but we sure as heck better get some additional acres next year or price rationing will need to occur in 2012/13. Two of my three technical indicators are bearish and the third one, stochastics, is in a choppy sideways trading type of mode.
WHEAT: 10 lower
I suspect that in the near term this market will be influenced by the corn market. Longer term it may get more interesting. The average trade guess for the Friday report is for the USDA to peg all wheat production at 2046, down slightly fm the last report. The HRS number is expected to slip from 522 to 498. It is also assumed that the report on Friday will show increased feeding of wheat and that coupled with a reduced production would of course tighten up the carry-out. We still have the ongoing drought concerns in HRW country and now it appears as if the drought situation in Ukraine and Eastern Europe is becoming more serious. Two of my three technical indicators are bearish both Minneapolis and Kansas City wheat at the present time.
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.