Today we are hosting our annual outlook seminar and have an exciting and informative agenda lined up. I will intend to provide you will updates from the speakers in the days ahead.
It would appear that the wheat market is beginning to experience a case of disinterest at this time. We have little fresh little news to deal with as we are basically post production in the northern hemisphere, we already know that world stocks are growing this year and are moving into the final stages of the 2014 harvest. Additionally, we will soon put the finishing touches on the corn and soybean crops so there is a lessoned risk of a big prices swing, i.e., rallies stimulated from problems there. Accordingly, prices appear to be adrift and very understandably so.
We still have the possible risk of additional turmoil from Ukraine but I suspect the trade is becoming slightly numb to that news once again so the focus for wheat should realistically be completely demand, or lack thereof for the foreseeable future. Problems for the U.S. though is that the with big crop coming from Russia and to a lessor extent Ukraine and Europe, no one will be beating down the doors here to purchase. While I suspect we have already factored much of these elements into the current price structure so downside potential should be limited for now, it provides us with little reason for rally other than the occasional short covering bounce.
We realistically do not appear to have much more news to help drive the corn market than we do for wheat at this time. The Pro Farmer tour continues and while they did note some residual problems from the rough spring that farmers in eastern Nebraska encountered this year, even then the state estimate was not significantly lower than the last USDA estimate.
I suspect that growing season story will be pretty well behind us after this week, which is not to say that there will not be lots of excitement and conjecture in front of the September USDA reports but rather, in traders minds the crop will have been made and the biggest question will be how much larger it may be? This is not to take away from the potential of an early frost and the issues that would accompany that, but that does not appear to be in the forecast coming from most meteorologists. We do have Drew Lerner of World Weather, Inc. presenting at our meeting today and I look forward to his always well-researched outlook.
The near-term weather outlook appears ideal for putting the finishing touches on the 2014 crop with frequent showers forecast for much of the Midwest through the balance of the week and we appear to experiencing something that has been in somewhat short supply this summer; heat and humidity.
All that said, the corn market actually did a nice job of bouncing higher into the close yesterday and even through we are back under pressure this morning, we remain in a now 5-week old sideways pattern. While I do continue to believe the corn market should press into lower lows moving ahead into harvest and it may take some time to redevelop and refocus on demand but that said, that majority of this bear move should have already occurred. Too often, people will tend to become desperate at the bottom and begin making sales out of a sense of hopelessness. While I would not say we have quite reached that point but once it does happen, the end is very near.
We seem to have a midweek void of news in the bean market as well this morning. The weather forecasts look near ideal, news from the Pro Farmer tour has produced no bullish surprises and there has been nothing but standard export interest. Looking at all of the above, it is a little surprising that prices have not been under more pressure than they already have.
Since breaking lower a week ago yesterday, November futures have been congesting in a range between 10.70 and 10.40 with the majority of the trade between 10.60 and 10.45. The meal market has been the stabilizing force as demand has remained a bit stronger than expected forcing crushers to step up but with harvest right around the corner, it is difficult to imagine that remaining a long-term influence.
Once removed, I continue to expect to see November futures to make a push down to the 10.00 level, which in the greater scheme of things, is not significantly lower that current, just 7%. As with the corn market, I do believe we have the majority of the downswing already in the rear-view mirror and this should not be the time to make desperation sales.