EHedger Afternoon Grain Commentary 12/12/12
Dec 12, 2012
Grains closed lower with wheat selling off sharply into the close. March corn closed 2 ½ cents lower at $7.25 ½, January soybeans 1 ½ cents higher at $14.73 ½, March wheat down 9 ½ cents lower at $8.12.
There were no fresh USDA sale announcements this morning to prop up the market and funds were estimated to be heavy sellers of corn and wheat. The FOMC decision to purchase more assets was supportive for commodities but most of it seemed to already be priced into the markets. Corn demand for ethanol production was down 1.32% from last week while stocks were up sharply. Overall the report was bearish. CBOT markets are also seeing follow-through selling from yesterday’s Supply and Demand report and technical sell signals.
Traditionally the December WASDE report is not a major market mover. Traders were expecting corn exports to decrease but they kept demand numbers unchanged in the US. This was considered supportive for corn and its price action has remained stable even through the massive selloff in wheat.
Wheat’s export demand was actually lowered by 50 million bushels which lowered wheat carryout by the same amount. This was enough for price to fall below the long term trendline support. Yesterday at 9:30 am we saw a major volume spike and selloff which was odd since the pit was open early and the market had 2 hours to digest the report information. It seems obvious that this is black box (computer based) trading that isn’t turning on until its usual timeframe. We crossed a major technical trendline in wheat which is spurring stop orders and additional selling. The market also had a major selloff in the last 60 seconds of the close today which maybe an attempt to settle the contract near the lows. Take a look at the volume in the last 60 seconds of the trading session of March wheat in the chart below.
Daily March Wheat Chart
1-Minute Bar March Wheat Chart
Soybean carryout fell right in line with expectations at 130 million bushels and beans have settled relatively unchanged ever since. Soybean production was left unchanged at 55.0 MMTs in Argentina and 81.00 MMTs in Brazil. Estimates were calling for slight decreases for both. Corn production was lowered by 0.5 MMTs to 27.5 in Argentina and left unchanged in Brazil at 70.0 MMTs. Chinese corn production was raised by 8 MMTs which was rather surprising.
NOPA crush will be released on Friday at 7:30am. November’s crush number was higher than expected and we have to start seeing more rationing. Friday’s report will be a big indicator for soybeans.
Export Sales Expectations for Thursday, December 13th, 2012 at 7:30am (Dow Jones Poll)
Wheat 300,000 – 600,000 MTs
Corn 150,000 – 400,000 MTs
Soybeans 550,000 – 900,000 MTs
Soybean Meal 200,000 – 350,000 MTs
Soybean Oil 5,000 – 25,000 MTs
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