Corn: Choppy trade took over corn on Monday. Light pressure off the open came from a bounce in the dollar. With the trade looking for a 1.2 bushel decline in yield, the closing trades were nearly flat. There is no surprise that traders left this market quiet by the close.
These USDA reports have recently caused reason for concern, even on those that aren’t supposed to change much. Limit moves from USDA reports have become almost common lately. Trade looks for a 1.2 bushel decrease in yield from 155.8 down to 154.4. Normally that would not be that big of a change but who would be surprised at the USDA leaving yield alone? That would likely cause a 15 cent slide Tuesday. In all we can have expectations but this time around many are prepared for something shocking.
What about a neutral report? Should this report show a yield of 154.4 what do we have then? Yes, it is bullish, but a bull market needs to keep seeing news to support a further push higher. It will be over a month to the next production report and that one is in December, which many times is looked past in favor of the January report. That is a long time with no more help to keep this bull market going.
Right now we can’t say we need to turn bearish yet but each passing day should leave us asking: “What news is out there to keep this run going and keep me on the sidelines?”…Ryan Ettner
Soybeans: A private Brazilian analysis firm estimates Brazil is 45% planted. Though that is still behind the 49% at this time last year, it is clearly above the 38% normal pace. Producers are taking advantage of recent moisture. The general feeling is that Brazil is doing well as a whole. There is even a chance at seeing the USDA add 0.5 million tonnes to their Brazilian soybean production forecast. Its latest estimate, of 65 MT, is just under last year’s record 69 MT level…Rich Nelson
Wheat: Monday was a pre-report position balancing day, with a bullish bias. The wheat market is still concerned about the dryness issues in the winter belt. The market is bracing itself for Tuesday's USDA’s reports. We are not looking for drastic revisions on the wheat side of the report. We expect no changes on the production front and only a slight downward revision to exports. That would give a net gain in the wheat’s U.S. ending stock number.
What the wheat pit will be watching is for revisions to the world production number as well as revision to the corn production number. The corn production number will probably have the biggest affect on the market. The crop ratings continue to deteriorate. They dropped 1 point in the good to excellent ratings in today’s report to only 45%. The dry fall that has accelerated harvest for the soybeans and corn has hurt planting and germination of this year’s winter wheat crop. Today’s forecast does have rain in projected to fall in the driest portion of the winter wheat belt by the end of the week. There is some follow up moisture on the way for the wheat belt in the middle of the month…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.
