October 4, 2011
By: Craig Haugaard, Grain Origination Manager
Was yesterday just a dead cat bounce or is the market getting ready to roar once again?
CORN: 12 lower
This is a puzzling market to try and figure out right now. As you can see on the following chart, we went right down to the support levels that we have been looking at and seem to have found strength at that level. The dollar was up strong yesterday but even that couldn’t pull the corn market to a lower close. After the close FC Stone came out with their yield projections and they are pegging corn at 148.7 bu/acre. That is slightly higher than the last USDA number. At the end of the day, we bounced yesterday but nobody had a real good reason why other than that the market was oversold and in need of a correction. It will be interesting to see where we go from here. Obviously we have strong support in the $5.75 area and psychologically a close above $6.00 may bring in additional technical buying. The 800 pound gorilla in the closet, China, is having a weeklong vacation this week. If they think the market is starting to bottom we could see them come in as buyers as well which would juice this market. As things stand this morning I believe that yesterday was a dead cat bounce but a close above $6.00 today could turn the market momentum bullish. Of yeah, one final thing. I was wrong yesterday when I said I doubted the gap would get filled. It already has been.
SOYBEANS: 14 lower
After yesterday’s remarks it occurred to me that I should never mention pregnancy weight gain in my comments as my wife was quick to email and point out that she had lost the baby weight while darn near 30 years later I was still retaining my sympathy weight gain. An interesting day in beans as we hit our Fibonacci support level and bounced off of it. It is still very early in the export year but it is interesting to note that thus far for the year exports are running 39% less than last year with the USDA projecting that we will be down 5% for the year. Having said that, this is the time of year when we would expect to see exports start to ramp up. We are starting to get a little news out of South America as well with bean planting starting in Brazil. News from Brazil is that they are projecting the crop to be 75.2 MMT this year, up from the 73.5 MMT number the USDA is using. After the close we had the FC Stone estimates projected this falls national average yield to be 42.8 bu/acre. This is one bushel per acre larger than the last USDA report and may indicate that we will see this crop get bigger as the subsequent USDA reports are released. For the time being my technical indicators are remaining bearish and we have Fibonacci driven support at $11.68.
Last night’s planting progress report showed HRW planting continuing to lag with 25% of Texas planted versus the five year average of 49% planted. Oklahoma is the same type of story with 30% planted versus 49% on average. Having said that, we now have good wide spread rains in the forecast for HRW country. If those rains develop the planting progress could move ahead in a dramatic fashion. Parched portions of the Ukraine are also seeing rain forecast for them. In the meantime we continue to see cheap wheat offered out of the Black Sea which is keeping pressure on this market. The one “good note” that I can report is that satellite photos of China are reporting less acres of wheat planted than what had been expected. I don’t know how good that eye in the sky is but I thought it was interesting. All of my technical indicators are bearish with Fibonacci showing support in the Kansas City December futures at $6.53.
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.