Corn and beans — Where we go from here

Market Pulse: Nov. 16, 2010

Fundamentals

Corn prices temporarily rallied to a 27-month high, but then corrected lower to a three-week low. Bullish factors include:

  1. The USDA’s Nov. 9 cut in its U.S. corn production estimate for this year to 12.54 billion bushels from October’s 12.664 billion.
  2. The USDA's cut in its U.S. corn carry-over estimate to a three-year low of 827 million bushels from 902 million forecast last month, along with a cut in its global carry-over estimate to 129.16 MT from last month’s estimate of 132.36 MT.

Bearish factors include:

  1. The USDA’s Nov. 9 hike in its China corn production estimate for this year to 168 million tons from an Oct. estimate of 166 million tons.
  2. The early harvest, which has reduced frost risks, with 96% of the U.S. corn crop harvested as of Nov. 7, 23 percentage points ahead of the five-year average of 73%.
  3. Long liquidation after the USDA’s Nov. 9 crop estimates were near market expectations.

Soybean prices surged to a 26-month nearest-futures high. Bullish factors include:

  1. The USDA’s Nov. 9 cut in its U.S. soybean production estimate for this year to 3.375 billion bushels from October’s 3.408 billion, along with the cut in its U.S. carry-over estimate to 185 million bushels from October’s 265 million bushels.
  2. The USDA’s Nov. 9 hike in its U.S. soybean export forecast to a record 1.57 billion bushels, up from 1.52 billion projected last month.
  3. Strong Chinese demand after data from China's CGA showed that China imported a record 43.9 million tons of soybeans in the first 10 months of this year, up 26% from a year earlier.

Bearish factors include:

  1. Reduced frost risks with 96% of the U.S. soybean crop harvested as of Oct. 31, 17 points faster than the five-year average of 79%.
  2. The USDA's Nov. 9 hike in its global soybean production forecast for the year that began Oct. 1 to 257.4 MMT, up from last month's projection of 255.3 MMT.

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