EHedger Afternoon Grain Commentary 10/19/12
Oct 19, 2012
It was a mixed day for grains at the CBOT. December corn closed ¾ of a cent higher at $7.61 ½, November soybeans down 11 ¼ cents at $15.34 ¼, and December wheat up 4 cents at $8.72 ½.
The early morning hours were strong especially for wheat after Ukraine’s ag ministry announced an export ban for mid-November. At 8am CST the USDA announced the sale of 233,000 MTs of wheat to unknown destinations. Clearly today’s headlines were supportive wheat and the main driving reason for today’s strength.
Grains weren’t able to sustain their early gains much of which can be attributed to weaker outside markets. Today marks the 25th anniversary of the 1987 crash and the market action was rather symbolic for equities. The Indices had the largest selloff in 4 months which gave strength to the dollar and helped crude oil drop over $2.
Informa released their 2013-2014 acreage estimates and were not far off from their last estimates. They have soybean acres at 80.0 mil compared to 79.9 in September, corn at 97.5 (unchanged), wheat at 57.1 (down 0.6), and cotton at 10.0. Soybean acres at 80 million would be a record if that is the case.
After the close the USDA released its monthly Cattle on Feed report. September marketings were 88% which was below 95% last month and 90% from market estimates. September placements were 81% far below the 85% expected and 89% last month. "Cattle on Feed" as of October 1st was 97% which is 1% below expectations. Lower on feed and lower placements will eventually translate to higher price levels. This is also more evidence of feed rationing.
The weekly Commitment of Traders report showed slight declines in the net long positions held by the managed money. For All-Wheat they are holding a net long position of 97,203 contracts using futures and options (a net long decrease of 1191 from last week). For corn they are holding a net long position of 256,561 contracts a net-long decline of 3,905 since last week. Their net long soybean position was reduced by a net 9,811 contracts leaving them net +167,096 contracts. The funds are still holding sizeable long positions but are off their record levels.
December corn closed above the 9-day moving average which is short term positive. The exponential oscillator is again at positive territory is also friendly. Near term resistance may be found at the 50 day moving average of $7.74 ½.
November soybeans closed above the 9-day moving average which is short term positive. The gap from the 4th of July started to fill this week but was unable to get to the $14.78 target level. This may be enough to slow technical liquidation for now especially since we are starting to see beans come off oversold levels. First resistance is seen at the 100 day moving average of $15.57 ½.
As of Friday October 19th the average price of December corn for the month has been $7.51 ¼. The average price of November soybeans has been $15.33 ¼. The harvest price is now 2/3rds of the way to being locked in. To sign up for a free EHedger trial please click on the link below. Have a great week! Have a great weekend!
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