Closing Comments
Lynn Miller
September 29th, 2015
Fairly quiet trade today as they position for the USDA September stocks report tomorrow.
Some trade ranges:
Range Avg USDA Sep 1, 2014
Wheat 1.987 – 2.285 2.149 1.907
Corn 1.647 – 1.850 1.739 1.232
Soybeans 0.165 – 0.250 0.205 0.092
Other than pre-report ‘stuff’ the trade was also focused on First Notice for October Soy products, the end of the month/quarter, weekly crop progress/conditions, yield results both US and abroad as well as weather updates and farmer selling.
Corn:
Some points of interest in the corn market today, fundamentally from around the world. South Africa is still expecting to see their smallest staple crop harvest since 2007, but they did raise their mazie production estimate to 9.94 million tons. Canadian crops will be estimated on Friday.
Yield talk today: Illinois 145-252bpa, Iowa 175-235, Minnesota 197-208 and Indiana 205
The other interesting thing going on, corn is gaining against beans. It’s not so much that corn has rallied, but that beans are losing. This is basically backward psychology. Most years we rally to buy acres, but this year it appears we are trying to discourage acres with low bean prices.
Technically all three indicators are still bullish December corn. We saw an inside day today – meaning lower highs and higher lows than yesterday. This could be a warning sign of a change in direction; however, I take it more as a holding pattern as we approach tomorrow’s September stocks report. The stochastics are still near an overbought signal, meaning large numbers tomorrow could push us into a technical sell off. My price objectives continue to 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:
Most of today’s price action was based on pre-report positioning. With the main focus tomorrow being a yield adjustment for 2014 production. The trade it looking for 47.3 vs. 47.8, this translates to a loss of 35 million bushels.
We saw crush margins under pressure today and with that bean spreads are improving will meal spreads are weakening. Some reports the funds started to roll November positions today.
Still no new export sales announcement coming from the agreement between the US and China last week. Last chance to report these sales will be next Thursday as Friday’s announcement was one day past the cutoff – but any sales over 100.000 mt would have been announced already. This leaves us confused if china really committed any 15/16 sales.
Technically, all indicators are solidly bullish the November contract today with a strong finish. The stochasticts have tipped sharply but are still bullish in neutral territory. I’d still be willing to price beans at $8.00 cash with other price targets at $9.06, $9.28 and $9.50 futures.
Wheat:
News in the wheat markets remains thin, but we do get a nimble from time to time. Today the focus was on Egypts import policy. They are studying the increasing protein requirements from 12 to 12.5 %. This sent European wheat lower for the second session.
Russia has harvested approximately 82% of their planted acres with an average yield of 2.43 tons per hectare, down from 2.53 last year.
When it comes to pre-report chatter – about all I got out of wheat was some thought that the market is underestimating wheat for feed use in the June/July/August time frame. The clue to these higher feeding rates in our current market environment is the amount of low grade wheat being shipped to South America. This may have an interesting effect on the stocks tomorrow.
Technically all three indicators are still just barely hanging onto the positive side for the December Minneapolis futures. The stochastics have come together in today’s session, while we managed to close right on the 10-day moving average. This market is braced for the worse for tomorrows USDA Stocks report. We still see support @ $4.99 with selling targets at $5.35, $5.58 and $5.76.
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