EHedger Afternoon Grain Commentary 8/27/12
Aug 27, 2012
Corn, wheat, and soybeans started off strong on Sunday night’s session but ended the trading day weak. December corn closed 7 ¾ cents lower at $8.00 ¾, November soybeans down 12 ¾ at $17.18 ¾, and December wheat down 7 ¼ at $8.81 ¼.
The export inspections fell short of expectations this morning and were a major factor in today’s weakness. Soybean inspections were 17.40 million bushels compared to market expectations at 23.00 million. Wheat was 18.84 million bushels compared to 21.0 expected, and corn was 14.45 million, compared to 22.5 expected. The market can be extra sensitive to any changes in demand on a year like this. We will have to continue to watch for morning sale announcements and Thursday’s export sales reports.
Weekly Crop progress shows corn at 76% dented (5-year average at 46%) and 26% mature (5-year average at 8%). Corn is now 6% harvested and crop conditions had a 1% drop in the good to excellent – now 22%. Soybeans also dropped a point in the good-excellent rating to 30% and 8% of the crop is dropping leaves.
Friday’s Commitment of Traders report didn’t show any signs of the funds slowing down their purchasing. The ‘managed money’ is now net long 342,893 contracts of corn which is an increase of 39,715. They are also net long 252,388 contracts of soybeans, an increase of 21,845! Clearly the funds have continued to press their bets.
The production estimates from the Pro Farmer crop tour were less than anticipated and generally viewed as "bullish". At the same time, we have Informa raising their acreage estimate (due to FSA numbers) and have corn and bean yield pegged above the USDA’s current estimates. Even though Informa has raised their production estimates they have pegged demand much higher than the USDA bringing their ending carryout estimate lower.
Technically December corn had a bearish crossover in the exponential oscillator (see chart). This can be used to help spot a change of trend and given that we are entering harvest it is something to note in case of further weakness.
Chart: December Corn
Soybeans continue to look strong until we see a significant change in demand. Upside resistance is seen in November at $17.87 and downside support at $16.46.
Chart: November Soybeans
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