CORN: 9 higher
In case your Chinese is a little rusty the old Chinese saying as best I can translate it is, “He who doesn't sell and then hopes Chinese purchases will bail him out loses pants.” The reality seems to be that we have good harvest weather, yields reports seem to indicate that this is a crop that may be getting bigger and the rains in Brazil are causing their yield estimate to increase. As of yesterday private analysts are pegging the Brazilian corn crop at 63 MMT, up 2 MMT from the latest USDA projection. That is all bearish and that just leaves China for those bulls that are playing along at home. The thought is that potential Chinese demand is so large that it could take corn to the stratosphere. The problem is that even the more aggressive scenarios that I have seen in terms in Chinese demand still end up with a carry-out of around 780. The Chinese are usually very disciplined buyers so I would be surprised to see them step in during the heart of harvest as prices are moving lower to support this market. They are more likely to wait and see if it will fall on its face and then come in and buy. My technical indicators are all bearish and I can’t begin to stress enough how important it is that we not have a decisive close below $5.75 in the December futures. Were that to happen I believe you could very easily test the $5.00 level.
SOYBEANS: 12 higher
This market yesterday was treated with almost as much disdain as bacon at a Ramadan celebration. As reports of strong yields continue to come in traders headed for the exits yesterday which put more downward pressure on the market. We will see the latest Informa numbers today which should be interesting and as we noted in yesterday’s comments, FC Stone has already given us their latest yield estimate. I put the following balance table together using the latest USDA information but substituting the FC Stone projected yield number.
As you can see this scenario would cause the carry-out to grow from the 2010/11 projected 214 to 226 for 2011/12. Add into the mix the fact that they are getting beneficial rains in South America and we have created a pretty ugly near term picture for soybeans. For the time being my technical indicators are remaining bearish and I am having a hard time finding the next support level now that the Fibonacci driven support at $11.68 has been taken out. In looking at the weekly charts I suppose the next level of technical support would come in at $11.13. If we get that low I would expect this market to test the $11.00 level.
WHEAT: 5 higher
With the near certainty that rain is coming to the parched HRW country the market moved decisively lower. It is suspected that this rain will encourage the planting of more wheat acres as well as help the wheat that is already in the ground. We had a Stats Canada report yesterday which placed Canadian wheat production at 24,160 TMT. This is up about 1 MMT from last year and they have a history of under estimating the crop initially so the general feeling among the trade right now is that this number could get larger. We continue to watch drought in Ukraine and Eastern Europe but right now the bigger story from that part of the world seems to be cheap Black Sea wheat. My technical indicators are all negative with support in the Minneapolis December futures at $8.20 and 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.