Tight yield prospects, weak dollar supporting corn

Corn: Over the weekend the G20 meeting came out with little in the way of additional market-moving news, which means that dollar sellers were able to keep grinding it lower. Many feel that when the Fed meets on Nov. 1 and 2, they will talk about printing dollars. More dollars in the system dilutes the value of each dollar. What that means to corn is that we can at least look ahead to this whole week being bearish to the dollar. This could offer continued support to corn prices.

Now, even if that Fed meeting says nothing or is simply not bearish, corn still has the Nov. 9 production report where early estimates call for another one or two bushel decrease in yield. That means for now through at least the next two weeks, without something coming in from left field, corn will have a bias to higher trade. If the Fed does give us bearish dollar news then there is no doubt that we need to hold off any sales in this market to the production report. If the Fed comes out with neutral or bullish news, then there may be some concern.

In the end, what we are saying is that a surprise from the Fed to start next month could have a larger influence on this corn than even the production report. Keep focus on that meeting first before looking ahead to any other reports. With this many people bearish the dollar, and thus bullish commodities, we need to watch the actual meeting closely for decisions on our corn activity…Ryan Ettner

Soybeans: The onslaught of supportive news continues. Monday's news that China purchased 232,000 tonnes of U.S. soybeans simply shows China is still feeling soybeans are at a “value” here. Last Thursday’s weekly export sales report, good for Oct. 14, showed we have booked 14% more soybeans than last year. USDA is currently only thinking we will beat last year by 1.5%. So, on Nov. 9 we will see USDA add to the export sales row…Rich Nelson

Wheat: Wheat traded as the follower on Monday. It ended higher on the settlement but several times through the day it did try to break. News was pretty limited to trade today. Export inspections came in at a neutral 21.5 million bushels.

Weather-wise most of the soft red wheat areas did receive rain this weekend. Forecasts are mixed on what is on the way. Some of the precipitation events will be light. Greater rain will be needed to fix long-term moisture deficits. Last week’s rain in the hard red wheat areas was less evenly distributed. Dry land crop areas from Texas Panhandle into the southern half of Oklahoma and parts of Eastern Kansas received beneficial rains. Most other areas in the production region did not receive enough rain. Moisture deficits are continuing in western Kansas, eastern Colorado and southwestern Nebraska. We will be keeping a close eye on these areas to see if the get some rain before the wheat goes into dormancy.

A poor wheat stand could cause some problems down the line. Monday's crop progress report showed the winter wheat crop is 88% planted vs. 77% a year ago and 84% average for this time of year. The wheat emergence came in at 64% vs 64% average. The first ratings of the years showed 47% of the crop was rated good to excellent compared with 62% last year…Jim McCormick

Ryan Ettner is a registered commodities broker and grains analyst at Allendale, Inc. Rich Nelson is Director of Research at Allendale. Jim McCormick is a Sr. Broker at Allendale, Inc. Allendale is registered with the CFTC and NFA and is a member of the NIBA. www.allendale-inc.com.

About the Author

Ryan Ettner is a registered commodities broker and grains analyst at Allendale, Inc. Steve Georgy is a Sr. Broker/Manager at Allendale, Inc. Jim McCormick is Senior Broker/Manager at Allendale, Inc. Allendale is registered with the CFTC and NFA and is a member of the NIBA. www.allendale-inc.com

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