Corn selling slowed by carryout expectations; soybeans face volatility

All eyes are focused on Thursday USDA report

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Corn: For most of last week, as well as the first half of Monday, traders have been selling new crop corn looking for a potentially large new crop carryout number. It would be safe to assume that trade was likely getting prepared for a 1.900 to 2.000 billion bushel number Thursday. At noon Monday, trade put out an estimate of 1.714 billion, which is certainly large but maybe a good deal smaller than trade had been factoring. That instantly slowed the December corn selling, which could be a new pattern to expect going into the report.

If Monday’s estimate is correct, than maybe trade will feel they have done enough new crop selling for now. Old crop carryout expectations were almost right on with what trade was thinking. We had mentioned in the past that trade might have been “selling the rumor and buying the fact,” but it now looks like they are already buying “facts.”

When all is said and done the number on Thursday is most important. While we have no argument that the final carryout number will be somewhere around Monday's estimate, we do feel the USDA will give us a much larger number for this May report. Look for a little more subdued trade for the next couple days as today’s estimate was a little surprising, we will see if the report is as well…Ryan Ettner
     
Soybeans: Money flow was a big issue for the beans on Monday. The dollar rallied early in the session due to the election in France pressuring the euro. Once again, we sold more beans Monday morning.

“Unknown” bought another 110,000 tonnes of OLD crop. It seems like buyers have been focused on NEW crop lately, and it has been a while since we had seen a bigger old crop sale. This could be due to the talk that farmers in Buenos Aires Argentina plan to strike for four days. No grain or livestock sales during this time to protest a planned tax hike on farm sales of 350%. Demand is a big reason we are at these prices, and we have said before that we are the cheapest store for beans. As long as this continues, we are going to continue to see sales of old and new crop.

Estimates for Thursday’s report were released Monday, and the trade is expecting to see a decline of 36 million bushels of old crop. That is a reduction from 250 million down to 214 million. This will also be our first look at new crop carryover. We are expecting to see a number of 164 million for new crop. Estimates for new crop are higher than first expected. We were hearing talks of sub-100 million carryout levels a few weeks ago to now a number at 164.

Are analysts adding in an increase in acres already? USDA will not change acreage on this report. They will have to use the acreage number from March 30th. We will most likely see big volatility before Thursday’s report as we see positioning take place…Steve Georgy

Next page: What's up with wheat?

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