Closing Comments
Lynn Miller
November 3rd, 2015
Corn:
Not much new news in the wind today. Funds bought 7,000 contracts Friday, sold 7,000 yesterday and bought back 9,000 today. This sideways price range could very well prove to be a problem for us as it is appearing not high enough to entice farmer selling and then not low enough to generate export demand. On the other hand, Brazil exported a record 5.5 mmt in October vs. 3.5 in September.
FC Stone Final yield numbers out yesterday: 168 bu/acre with a total crop of 13542 million bu.
Informa’s numbers were out this morning: 170.1 bu/acre with a total crop of 13718 million bu.
Both estimates are larger than the USDA’s 168 bu/acre and total crop of 13555 million bu.
Technically, the stochastics issued a buy signal today and we closed at the 10-day moving average making 2 indicators bullish, but this market has been terribly hard to read. Current support levels $3.75 and then back to $3.58. I continue to believe $3.94 is a very sellable level, I do not however, believe it will be a long lived opportunity next time it presents itself. If you’re really bullish you could look at $4.06 and $4.17 after that.
Soybeans:
Beans saw decent gains throughout the session but gave them all up at the close to end sharply unchanged. Good rains in Brazil and bigger crop estimates are offering resistance, while front loaded demand and harvest wrap-up are offering support.
FC Stone Final yield numbers out yesterday: 47.5 bu/acre with a total crop of 3917 million bu.
Informa’s numbers were out this morning: 47.9 bu/acre with a total crop of 3952 million bu.
Both estimates are larger than the USDA’s 47.2 bu/acre and total crop of 3888 million bu.
If we would continue building stocks at this rate, another year of +47 bu/acre yields could very well push the carryout into the realm of 635 (which is a stocks to use ratio of 17%). Historically stocks to use ratios this high are associated with sub $7 futures. That’s a number pretty hard to swallow in the current environment.
Current cash bids are only giving corn a $12/acre advantage over beans. This is too tight to encourage additional acres. Could the solution of the market be to run beans so low people don’t want to plant them?
Technically, all three indicators continue to be bearish the January futures. Even though the stochastics haven’t signaled for us yet, they are in deep oversold territory which should lend for some technical buying at some point here. Support continues to hold at $8.57 on the down side with selling points at $9.02, $9.31 and $9.54. I’m still looking to sell at anything above the $9.00 futures mark. This is a good sale under the current market condition and the nearby basis improvement just adds a little extra to it.
Wheat:
Values rebounding after yesterday’s sell off. Condition ratings for Winter Wheat were increased from 47% - 49% good to excellent as rains came through the southern US last week. Some argue these rains were timely and did more good than 2%, next week will tell.
Focus of the day was probably concern for the 2016 crops in the FSU where they are unusually dry as we talked about yesterday. Rains that are now too late to help crops in Australia are causing quality damage and degrading large areas to mostly feed wheat. All this market needs is a weather story to give us some short term opportunity.
Technically, the yo-yo continues with two fo three indicators once again bullish the December Minneapolis futures. The only indicator lagging is the MACD and it’s the only indicator that has been relatively steady the past few sessions. $4.99 continues to be our main line of support and resistance levels remain the same tonight with my selling targets at $5.35 and $5.58 and on the high side $5.76.
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