Closing Comments
Lynn Miller
September 28th, 2015
Corn:
First out of the chute this morning was export numbers. We came in at 32 million bu. Vs. 24 last year. This afternoon they gave us crop conditions of unchanged at 68% good to excellent. Harvest continues to progress north, and as it goes the yields are coming in better than expected in areas of IA and Illinois. Minnesota is coming in as expected so far, which is a feat in its own right considering.
Another thing affecting corn fundamentally: Pigs. The US hogs report is showing we have finally fully recovered from the PEDv outbreak last year with pigs/litter now at a record 10.4 and inventory back up to a record 68.4 million head.
Technically all three indicators are currently bullish December corn. Even today’s sluggish price action managed to stay above the 10-day moving average as we come off of last week’s positive price trend. We are approaching over bought in the stochastics. As this is a lagging indicator I’m hoping we can get one more move upward out of this before we see a technical correction. My price objectives would be $3.96, $4.06, $4.18 and at the top end of the range $4.29. If you are holding onto old crop bushels and need to price some out to make bin room – I’d be looking for $4.05 on the board to make that sale. You still have this year’s corn to price should this keep moving higher.
Soybeans:
Export data this morning was poor to say the least. 19 million bu. Vs 26 last year. The market was extremely disappointed the USDA did not release the 13.2 million bushels China signed for last week.
Crop conditions tonight were down slightly at 62% good to excellent. Harvest is now about 21% complete vs. 7% last week.
Weather is improving in Brazil and Argentina. Brazil’s continued economic problems are starting to slip from ‘boom’ to a ‘moral hazard’. As inflation increases producers will start to hold beans as a currency hedge in lieu of selling.
Technically, all indicators remain thinly on the bullish side in the November bean contract. Today’s price action closed right on the 10-day moving average which could be critical as we come into the Sept 1 stocks report Wednesday. The stochasticts have tipped sharply but are still bullish in neutral territory. I’m looking to see what kind of pressure this market will come under as we approach the trend line. Will it find gas to step it up or will this force us back down on ideas of big stocks and slower demand. Right now I’d be willing to price beans at $8.00 cash, that’s going to be a big mental number I think. Most break evens are right in this range on average crops. Price targets above that level would be $9.06, $9.28 and $9.50 futures.
Wheat:
Wheat continues to just not have much to talk about. We can look across the ocean and find some support as forecast for FSU and Australia continue to be dry 10 days out.
Export inspections are catching up the shipments in wheat but the overall pace is still lagging last year by 16%.
To just watch it one would say today’s price action was a ship wreck, but support held. Despite settling well off the highs, the higher low merits some consideration if the technical structure of the market is going to be the main feature for now. I don’t believe this market is perched to make any big comebacks as supply is big and demand is low. But, I do believe another move higher is in the cards and should be rewarded with sales.
Technically all three indicators are hanging onto the positive side for the December Minneapolis futures. The stochastics are approaching overbought though. We managed to break out of the downtrend on Sept 23 and now we hope that a technical correction will not breakthrough that trend line support when it happens. For the time being we are still using $4.99 as support for this market with selling targets at $5.35, $5.58 and $5.76.
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