China sales weigh on grain and oilseed markets

Grain & Oilseeds Report

Corn: Additional old crop selling was active in the Sunday night trade once again, starting in the bean market and spilling over into corn. China stating that it will be releasing more beans from its reserves early in the week combined with poor soybean meal sales, and that resulted in very active old crop bean selling that caused the September/December spread to break support. Corn basis does continue to hold strong, but that much weight on old crop beans was bound to pull on September corn as well.

Later on, it was announced that various ethanol plants would be shutting down temporarily for maintenance this week. New crop saw pressure as well as early light fund selling came into the corn market followed by yet another 15 day rainfall outlook that had plenty of rainfall for most areas.

Next chart support of 454 1/4 was put to the test today as December fell to 456 and managed a slow comeback through the rest of the day. For this week, the outlook still looks bearish for corn with one private analyst group announcing Monday it is expecting to see higher yields on Monday’s crop report. Acreage is the next big question for this market, and the August report has changed planted acreage just six of the last 20 years.

As previously mentioned, the bulls might see some lost acreage from this report but the larger lost acres would be expected on the October report. Bulls might have to rely on outside market help from the beans this week while hoping that the 454 1/4 support also holds. Bears will look for funds to be sellers again this week and weather to continue offering little or no threats as it has the last two weeks. Most important for the corn bulls, they must see the funds at least take the sidelines as bargain buyers have been hit hard lately by the active fund selling…Ryan Ettner

Soybeans: After starting the day lower, beans closed 1 3/4 higher for November at 1183 1/4. That was almost 13 cents off the lows and seemed like we had seen profit taking late in the session. It was announced that China was going to sell 500,000 tonnes of soybeans out of the State Reserves. If this sale is successful this week, we can see further auctions in the near future.

This week will have traders preparing for the USDA report next Friday. We feel USDA will make some changes to planted acres as well as harvested acres on this report. They will also make adjustments to yield as well. So what we are saying is that USDA is going to change just about everything. With crop conditions at 64% good to excellent, which is still a good  average, it is still likely that we will see a change lower for yield. These numbers are going to be from the month of July not what is going on now in August. From July 1st to August 1st we have seen conditions decline and that is what USDA could make their decision on. Acreage could see about a 1/2 million acre reduction for harvested acres.

With all this said, the questions is, where will carry out be? Beans can find support on the charts going into this report but we should see carryout somewhere between 190 million on a low end and 266 million on a high end. Chart support near today’s lows with support at 1186 1/2 and 1200.

Wheat:

  • Weekly wheat export inspections came in at 25.464M bu, which was in line with analysts’ estimates of 23.0-28.0M bu.
  • Some analysts are estimating Canada’s 2013 wheat production to beat the USDA’s estimate of 29 mmt due to very favorable weather conditions.
  • The US is involved in a recent wheat tender from Egypt for 60,000 tonnes, which is promising as the US was not involved in Egypt’s last tender.  The US is no longer the cheapest wheat on the market and has worried traders foreign countries will seek cheaper alternatives.
  • Harvest reports out of France have shown a good of quality of wheat, but the crop has a lower than average percent of protein, which could affect their baking industry.
  • Spring wheat good-to-excellent ratings were unchanged from last week at 68% GTE.  The winter wheat harvest is now 87% complete versus the 5-year average of 86%.
  • September Chicago wheat made a new contract low today of 641’4, which leaves 624’0 as the next level of support on a continuous chart… Alex Bassett
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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