Corn: Nearly all the influence seen in corn Monday was due to other markets. Trading volume was low, allowing for a bullish bean day to offer some support to this market, which is not expecting much out of Tuesday's report. To review trade expectations once again, analysts are looking for the corn carryout to drop from 1.887 billion bushels in November down to 1.871. By itself, this small drop in carryout would be considered negligible, which means that future support for the corn will have to continue coming from the bean market if this estimate is accurate. Most will expect to see some sales on the morning’s 8 a.m. announcement as it is common for exports to be made the night before a report. It might actually be considered disappointing if sales are not seen ahead of the report.
In the end, corn finished right on its highs from a combination of following beans and also possibly following a seasonal pattern that suggests corn should move higher from Monday to January. Funds were estimated to only be short 110,000 contracts Monday morning, which suggests they had covered more short positions last week than trade expected. If corn is going to follow that seasonal trade, it will likely have to come from fund short covering more than pure fundamentals right now….Ryan Ettner
Soybeans: The bean market punched to new highs for the move Monday as bears short covered their positions before the USDA report. Decent export inspections and the confirmation of bean purchases by China added to the day’s positive tone.
The weekly export inspections report showed that 60,430 (1,000 bushels) of beans were shipped out last week. We have now shipped out 703,365 (1,000 bushels) of beans year to date. The USDA confirmed that China had bought 290,000 tonnes of old crop beans and 60,000 tonnes of new crop beans.
Tuesday the USDA will release its updated WASDE report. With the phenomenal export pace and crush we have been seeing, the trade is anticipating some demand revision. The trade is looking for bean ending stocks to come in at 153 million bushels with the trade range being 170 to 118 million bushels, In November the USDA projected the bean ending stocks to be 170 million bushels. World ending stocks are forecast to jump to 71.4 mmt up from last month’s 70.23 mmt estimated.
Weather in South American continues to get a bearish spin with most in trade looking for the Brazil crop to be between 90 and 92 mmt and for the Argentina crop to come in between 55 to 57 mmt. With the weather looking so good in S.A. we are hesitant to chase the market over the $13.00 level and think eventually beans will work back down to the $12.50 level. With the run up we have seen into Tuesday's report, the market is set up for a buy the rumor sell the fact reaction if the report is not quite “bullish” enough…Jim McCormick
Wheat: Wheat finished the day mixed today heading into the USDA WASDE report. Reports of winter kill due to cold temps and a lack of snow cover have caused some concern over the crop conditions. Some meteorologists are suggesting that as much as 5% to 15% of the wheat crop could have been damaged.
Snow of some amount covers most major growing areas after this weekend’s system we see snow in the Dakota’s, Nebraska, most of Kansas and Oklahoma and parts of northern Texas.
The WASDE report is expected to see large wheat stocks even after some production issues this past year in South America. Today’s settlement was the lowest we saw for the March contract and this could reestablish the downward pressure with a bearish report tomorrow and additional technical selling…Cordon Sroka