Friday Morning Grain Market Update...
Nov 02, 2012
The grain markets are mostly lower this morning. Nearby corn and soybean contracts tested last week’s highs yesterday, but were unable to penetrate, selling off later in the day. After a brief rally on Wednesday, both corn and soybean spreads are under pressure again today as index fund traders roll long positions into 2013 contracts. Groups such Rogers, Goldman Sachs and Deutsche Bank all participate in this roll. Harvest is nearing completion in most areas of the country, although producers in the Eastern Corn Belt continue to experience delays due to rains and heavy winds associated with the hurricane this week.
FC Stone released crop production estimates yesterday. The ’12 US corn crop was pegged at 10.88bil/bu using a 124.0bpa yield vs. 10.82bil/bu previously. The ’12 US soybean crop was pegged at 2.959bil/bu using a 39.1bpa yield, up from 2.849bil/bu previous. The more heavily followed Informa will release their estimates this morning around 10:30am CST.
EIA ethanol production was up 24,000bpd on the week at 825,000bpd. Stocks were up .4mil at 19.2mil/bar. The USDA will release a delayed Export Sales report this morning, Pre-Report Estimates:
· Corn 100,000 – 400,000mt
· Soybeans 500,000 – 700,000mt
· Wheat 300,000 – 550,000mt
Argentina corn planting is 40% complete vs. 56% last year; soybean planting is 3.6% complete vs. 12% last year. Brazil soybeans are 42% planted vs. 54% last year. Most areas in Argentina have received excessive rains since October 1st while most of Brazil has been dry. Most would agree that the direction of the soybean trade during the next several months will have more to do with the perception of the Brazilian crop than anything else.
After yesterday’s failure against stiff resistance, it will be interesting to see if the markets are able to hold together today. Most chart readers are still looking at a largely negative technical setup moving. The USDA will release their November Crop Production report one week from today at 7:30am CST.
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