Grains had a quiet trade in the overnight session on very light news following yesterday’s selling pressure. Corn was up a quarter of a center, soybeans moved 3 cents higher, and Chicago wheat continued lower – off 3 cents.
The national weather service has issued a frost advisory for parts of the Dakotas, Minnesota, Nebraska, and Wisconsin tonight. Commodity Weather group is still reporting that there is a "very low risk of freeze damage" as a result of this frost warning and the low temperatures projected over the weekend. The corn crop is roughly 10% behind in terms of maturity for this week in September. At the moment, the freeze concern remains in the back of trader’s minds but has been unable to help grains find a bottom.
Thursday’s USDA report weighed heavily on futures as yield estimates for corn and soybeans came in above market expectations. The USDA projected U.S. corn yield at 171.7 bushels per acre, 4.1 bushels per acre above their conservative August estimate. Production is now expected at 14.395 billion bushels for 2014/15. Soybeans saw a similar report, with the USDA projecting yield at 46.6 bushels per acre – 0.3 bushels per acre higher than trade estimates. Soybean production is expected at 3.913 billion bushels for the 2014/15 marketing year pushing stocks to use over 13% for the first time since 06/07.
Bears remain in firm control of the U.S. grain market after several technical levels were broken this week. The last hurdle for this crop remains the threat of an early frost/freeze which could creep into the market as early as next week. We continue to feel that downside risk remains in these markets and prices could slip another 10% without much difficulty if yield potential can hold through harvest.