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EHedger Afternoon Grain Commentary 11/12/12
Nov 12, 2012
Follow through selling from Friday’s report left grains sharply lower. December corn was down 20 ¾ cents at settlement closing at $7.18. January soybeans closed 46 ¼ cents lower at $14.05 and December wheat down 28 ¾ cents at $8.57 ¾.
January soybeans started out with a gap opening trade below the 200 day moving average on Sunday night’s session. With favorable weather in South America and reduced fear of US soybean production the market was quick to liquidate more longs. Fears over the fiscal cliff continue to flood the headlines but we really didn’t see much weakness in the equities. There were also rumors of Chinese soybean cancellations but no confirmations.
The USDA reports will all be delayed 1 day this week due to the holiday (besides Cattle-on-Feed on Friday). This means we won’t get crop conditions for winter wheat until tomorrow afternoon and export inspections will be tomorrow morning. Without a whole lot of fresh fundamental news Monday the market was heavily influenced by some bear technical signals and Friday’s follow through sell pressure.
December corn’s 50 day moving average crossed below the 100 day for the first time since July 9th suggesting a change of trend. Volume was very strong Friday and today for Dec corn.
Jan beans gapped below the 200 day moving average on strong volume today.
WASDE REPORT SUMMARY:
The market was pricing in higher yields for soybeans but the USDA increased production above even the highest estimate. Total soybean production came in at 2.971 billion bushels when the average guess was 2.891. Total corn production was estimated at 10.725 billion bushels when the average guess was 10.629.
Most of the extra soybean production was immediately attributed to higher export sales estimates as it should be with our current export sales pace. The ending carryout for US soybeans is now estimated at 140 million bushels. This is still a very tight carryout situation when looking at 3.021 billion bushels in use this year.
The world corn and soybean carryouts were both higher than the October estimates. World production outside of the United States was unchanged besides a slight decline in EU Wheat.
With the extra corn and soybean production the US supply and demand tables are a little more flexible. Soybean export demand still remains strong and the world stocks to use level for corn is still extremely tight. We have to continue to watch for changes in demand most notably exports. January is still going to be the major time period for reports and market direction when we get an actual count of stocks.
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USDA REPORT AND ESTIMATES:
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