Corn: Another small setback occurred today as trade was once again given a forecast that was frost free until early October. This is the type of forecast that meteorologists have sided with recently. As we just talked about in our marketing meeting today, the total concern over potential lost bushels decreases rapidly moving into October. Anyone waiting for a rally based on a frost scare may be disappointed with moves higher on a late frost and might be better trading the short side of the market until our goal of 290 is reached. There really is no point in just watching this market move lower without taking some leftover weather premium out of this market. We will use rallies this week as selling opportunities. One of the levels we are choosing to be the most aggressive would be if corn can get back up to 320 or 330. There could be a bounce back to that level due to this market being sold off for four days in a row. Even if the yield numbers are not as large as predicted by some, the fact remains that there is no one I have talked to that thinks it won’t be big. For that reason, selling this market may seem obvious now given much less potential support from weather.
Soybeans: This market saw a similar reason for setting back as the corn based on a continued reduced risk of frost for September. To add onto that fact, the soybean export inspections came in at a very low level as well. With the possibility of exports slowing down to add on to reduced risk of cutting supply, this market was quick to sell off today. A move 30 lower was not surprising once this market was hit with bearish news from two different directions. Continued early yield reports are showing numbers that are at or slightly above expectations. There is some concern about how much potential loss in yield can be expected from areas hit by white mold but that will not be a number that can be seen until they are harvested. There is some talk that later planted beans that have mold in them may not yield any better than early variety beans already harvested. Again that will be something that can not be totally predicted until the combines roll. There is no doubt that in the mean time the market will be looking for large yields which could drive this market down to initial support of 882 and possibly as low as 810 once numbers come in that relieve some of this concern. Many areas will be starting bean harvest in the next week to ten days so watch out for numbers and surprise will only come in should these numbers be small.
Wheat: This market has reached our downside targets however corn has not. This leaves potential to move lower from these levels yet. There was a small bounce attempted this morning and about the only thought mentioned was “where can we sell this?” There are still no good reasons to think about buying this market. December Chicago wheat will need a close above 476 3/4 in order to break a long term trend line and give us some justification for wanting to buy this. Fundamentals still point in only one direction for now and that is what we will side with. Should we somehow find a bounce to break the trend line we would have technical reasons for getting long but there are still no fundamental reasons, so buying will have to remain short term.
Ryan Ettner is a Grain Analyst and Registered Broker at Allendale, Inc. in McHenry, IL. Allendale is registered with the CFTC and NFA and is a member of the NIBA. www.allendale-inc.com
