EHedger Grain Commentary 10/18/2011
Oct 18, 2011
Grains held support again as outside markets finished sharply higher. December corn finished 3½ cents higher at $6.44, November soybeans 2¼ cents lower at $12.50¾ and December wheat 1 cent higher at $6.25¼.
A revision of the export inspections was released this morning, with sharp differences from what we saw yesterday on the newswires. Corn was actually 21.17 million bushels, beans 45.036 million bushels and wheat 16.359 million bushels. Despite the sharp increase in soybean inspections, the market still held beans most resisted for the day.
The Dow Jones futures rallied sharply late in the day on a report of an EU bailout plan. This strength may continue into the overnight session, and we may see grain supported on the 6:00 open.
We continue to find resistance at the 200-day moving average in corn ($6.475). Unless we see a major shift in demand, it may be hard for the corn and wheat markets to rally much from here. With such a large world supply of wheat, we may continue to see fund selling into any rallies. We have talked about the "managed money" being long corn and beans for quite some time (even after the latest liquidation), but we also have to look at how short they are in Chicago wheat. With a high insurance price set early for wheat, it had plenty of time to ensure acres here in the U.S. and is one more fundamental that could keep the price resisted. At the same time, we have talked about how a low wheat price could keep the price of corn resisted as well as demand shifts.
We feel soybeans are the one product that has a little better story pricewise. With the latest USDA Supply and Demand report estimating a slight decline in yields and with carryout estimated at 160, they are still looking at a tight bean supply in the U.S. Today’s export inspections were impressive for soybeans based on expectations. Knowing that the global market can put a premium in beans if there are any weather scares in South America this winter (their summer), we could see beans’ price most supported from that. Please sign up for a two-week free trial using the link below to get specific strikes/prices or if you would like to test our marketing software product, AMMO.
Chart: December corn
(Red: 50 Day moving average Blue: 100 day moving average Grey: 200 day moving average)
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