Corn: There is little doubt that corn was a market looking to follow other markets on Monday. First when wheat opened with bad news, corn started lower but then by the afternoon beans had managed a large enough bounce to pull corn in that direction. As a whole, little was accomplished in the corn market, either bullish or bearish on the charts. If anything, Monday will be seen as a bit negative with the December chart posting a lower high and lower low than Friday.
Analysts spent the trading day estimating the corn harvest pace at 42%. As a whole, trade spent the day looking for a slow harvest pace. Beans have been seeing export announcements lately and wheat has been actively trading overseas weather, leaving corn with the least amount of fresh news right now. If this continues, then we look for Monday’s type of following trade to continue. Big yields will mean a slow grind lower for this market if it lacks other news to trade from, but if beans or wheat can start a new move, yields alone will be hard to pull corn lower if beans suddenly look bullish.
In general, the news is still quiet for corn and unless a fresh export is seen, there is little news to export for this market until Oct. 31. Going forward, look for corn to be a follower if either beans or wheat can manage a good move. Otherwise, continue looking for a slow grind lower…Ryan Ettner
Soybeans: The bean market bulls came out of the weekend on a buying spree as the November contract closed today at the highest level since Sept. 27. Demand optimism seems to be the driving factor behind Monday’s run higher.
Monday morning, the USDA confirmed the sale of 235,000 tonnes of beans to an unknown buyer. Most in the trade assume the buyer was China. The weekly shipment report showed that 59.2 million bushel of beans were shipped out last week. This was much bigger than the 41 to 46 million bushel shipments the trade had been anticipating. The trade is estimating that between 2 to 3 mmt were sold while the government was closed. We now wait for the government to play catch-up and confirm these sales. Through September the U.S. has sold 976 million bushels of beans. This represents 71% of what the USDA projects we will sell this year. So if we did sell the closes to 3 mmt of beans over the past few weeks, it looks like the USDA will have to do some upward revision to their demand forecast.
We will get a much better picture of where we stand on both the supply and demand sides of the ledger on the Nov. 8 WASDE report. When they finally release this report, it will have been 60 days since their last update, so it should be a market mover when it is released.
With the USDA back at work, we finally have some harvest updates. The trade was guessing that about 60% of the beans have been harvested as of Sunday. The report released after the close showed that 63% of the crop has been harvested. Now that the crop has breached the 50% level, we could see more grain flow to the commercial market. As farmers fill their on farm storage to capacity, they will have to move what they cannot store to the market. On average 69% of the crop had been harvested by Sunday. The crop progress report did estimate that 57% of the un-harvested crop was rated good to excellent.
The November/January soybean spread widened out again Monday with the November contract trading at a 2-1/2 cents premium to the January contract. This means it is still not paying the farmer to hold onto un-priced soybeans. The producer will lose 2-1/2 cents plus the cost of storage by holding beans into January. It will cost the producer 42-1/4 cents plus storage cost if they hold beans into July. If you are a producer, the market is telling you to NOT to hold onto your beans; the market wants them now, not six months from now. If you choose to hold onto them, the market’s is going to penalize you.
Producers should look to move grain right out of the field and re-own beans on paper if they want to maintain a bullish stance in the market. How the national yield shakes out will determine the market’s next move. With the crop size looking like it is getting bigger, Allendale does not believe the fall low has not been put in just yet and would not chase rallies over the $13.00 level…Jim McCormick
- Weekly wheat grain inspections came in at 20.582M bu, which was worse than expectations ranging from 24-30M bu. Last reported inspections totaled 27.219M bu.
- Argentina will release a new estimate for the domestic 2013/ wheat crop as the 8.8 mmt estimate from last week was an erroneous estimate. Last year’s harvest totaled 8.2 mmt.
- September Chinese wheat imports totaled 718,482 tonnes, which is now up 37% on the year. Most analysts estimate total Chinese wheat imports of 7.5-10 mmt.
- The wheat complex finished lower on the day due to profit taking and news that the estimate for Argentina’s wheat production was falsely low. Also, after last year’s global production of 650 mmt, Rich Nelson suggests we could see a number close to 705 mmt for 2013 global wheat production.
- December Chicago wheat backed off after touching the long-term downtrend line dating back to the November 9, 2012 high of 913’0. The wheat market has had a substantial rally over the past few weeks, but we could see a setback in the market over the next few days as we hit strong resistance… Alex Bassett