Bears in control of corn, soybeans and wheat

Grain & Oilseeds Report

Corn: Most of the trade is fully prepared for a yield increase to be seen on Friday and has already pre-sold this market considerably. Right now, the big question will be just how much increase will be seen. Early estimates from Bloomberg suggest a yield of 159.2 and a carryout of 2.044 billion. Any number that crosses above 2 billion for carryout will likely still catch selling attention when this report is released.

Monday saw only light selling, resulting in a new low once again, this time just 1/2 penny under the last significant low. It is likely that corn bears have already invested in short positions leading into this week with no clear reason for those shorts to exit until seeing the report. While it is possible that some profit taking could be seen on Thursday, a vast majority should have no problem remaining short. While fund selling was quiet Monday, funds added to their recent short position with the floor estimating the trading funds short 211,200 contracts.

Trade spent Monday expecting a harvest progress of 71% complete, which once again will be thought of as “done” by the traders. For now this market remains entrenched in selling. Corn bulls might finally find some exports gaining better traction after Friday’s report but they should take that as it comes. Bears are still in full control with yield estimates rising every day for Friday’s report…Ryan Ettner

Soybeans: Beans closed mixed Monday with the November contract settling 2 cents lower and the deferred contracts settling anywhere from 2 to 5 cents higher. Another lackluster day with profit taking more than likely attributed to any bounce in the market. 

Technically, we clearly remain in a downtrend and at this point will continue to sell on rallies. Good resistance is where the 20-day and 100-day moving average come in, around the $12.85 area. Harvest is expected to be 90% complete with average to above average yields across the country. Weather conditions continue to improve in Argentina and with rain on the way in Brazil, conditions look to improve in that region as well. As a side note, although demand is not an issue at the moment, never underestimate the USDA’s ability to reach into their bag of tricks.

Prices have fallen a dollar and a half since the beginning of September. Could we be a little oversold at this point? Any recovery at all should be looked at as a selling opportunity. You may want to consider buying calls as a re-ownership strategy as well. With the market so bearish, call prices look very attractive…Scott Donarski

Wheat:

  • Weekly wheat export inspections came in at 7.146M bu, which was well below the estimates ranging from 17-21M bu.  Last week’s inspections totaled 16.604M bu.
  • Saudi Arabia bought 720,000 tonnes of optional origin hard wheat for delivery between January and March 2014.
  • Iran’s grain agency, GTC, is looking for 300,000 tonnes of milling wheat over the next few months.
  • The average trade guess for US wheat ending stocks is 519M bu, which is a good deal lower than the September 30th report number of 561M bu due to demand. The average estimate for world wheat ending stocks are 175.879 mmt, down slightly from USDA’s September number of 176.28 mmt.
  • December Chicago wheat settled below the 65-day MA of 665’6, which could lead to additional selling before Friday’s USDA report…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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