Corn: Early Monday morning there was an announcement that Mexico bought 197,200 tonnes of corn Sunday night, which offered light support. This news helped to offer a small bounce to corn, which was in need of a bounce anyway.
Overnight lows took this market close to the contract lows once again, and sales like the one seen overnight might help the corn to avoid making new lows just ahead of the quarterly stocks report next week. On the last supply/demand report, the USDA reduced old crop stocks by 58 million bushels, which could take some excitement out of the upcoming quarterly stocks report.
With corn sales moving at a solid pace, there could have been expectations for a reduction in stocks, but with it already taken off on the last report we would not expect a neutral report for corn. Corn bears are likely willing to slowly grind this market lower through the contract lows but might hold off on doing that until after the stocks report.
This gives reason for corn bulls to be buyers near the 445 3/4 lows. These same corn bulls should feel more confident as long as volume remains low like it was Monday coming in with a December volume of just 77,009. That is the lowest volume for the December corn since back in mid June.
Short term, it looks like the contract lows could hold for another week. Long term, the harvest reports continue to suggest corn can keep the grind lower. Once again, today, there was talk of yields coming in better than expected…Ryan Ettner
Soybeans: Beans started the week on a negative note as a lack of fresh bullish news seemed to keep buyers on the sidelines. With the week looking open for harvest, the trade will be waiting for actual yield results to see if they come in at, above or below the producer’s expectations. Actual yield results will have a big impact on the market’s next directional move.
Last week the trade seemed to be dominated by liquidation of the long beans/short corn and long beans/short wheat spreads. With one week left until the end of the month and quarter, it looks like those spreads are still under some liquidation pressure. Soybean ratings are anticipated to stay steady or increase a point on Monday night's number. This added to Monday's negative tone.
With harvest ramping up fast, these rating numbers will have less and less impact on market direction. The next big market-moving event will probably be next Monday’s quarterly stocks report. Allendale is looking for these numbers to be friendly. We will be releasing a breakdown of our numbers by the middle of the week.
Monday’s export inspections number came in at 2.972, which was within the trades anticipated range of 2.0 to 4.0 million bushels. We would look for inspections to pick up as harvest picks up steam. We anticipate the market will continue its wide trading range as the market tries to determine what size of crop is actually out there. It looks like it will take real harvest results or the October WASDE before the trade will have any confidence in the yield number. In the meantime, trades should look for a volatile ride. The next critical are of technical support for the November contact is the $1300 to $12.80 zone...Jim McCormick
- Weekly wheat export inspections came in at 46.024M bu, which was much better than the expectations ranging from 38-43M bu. Last week’s inspections totaled 46.47M bu.
- CNGOIC has increased its estimate for 2013/14 Chinese wheat imports to 7.5 mmt up from 6.5 mmt previously due to a poor domestic crop. The USDA estimates 9.5 mmt.
- Russia is now planning to buy domestic wheat in an attempt to rebuild wheat stocks after last year’s drought cut its wheat crop by a third. Russia is one of the world’s leading wheat exporters and with less Russian wheat available the US could find increased demand.
- The Russians have now harvested 72.7 mmt of their expected 90mmt 2013/14 wheat crop and is currently getting delayed as a result of good rainfall.
- December Chicago wheat went up to test resistance at 657’0 on news of increased Chinese wheat imports, but finished a little weaker as this was already known… Alex Bassett