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EHedger Afternoon Grain Commentary 8/22/12
Aug 22, 2012
Grains closed the trading session slightly lower. November beans finished 4 ¾ cents lower at $17.27 ¾, December corn 4 cents lower at $8.34 ¾, and December wheat down 5 cents at $9.17.
The Pro Farmer crop tour still seems to be the main focus of the market. Yesterday’s results revealed a slightly better pod count and corn yield estimate than expected in Indiana. We still have the rest of the week to get through so we will want to monitor any news coming out of the field for short term direction.
STATSCAN released their survey results this morning. The average analyst estimate was calling for 16.40 MMTs of canola production but instead came in at 15.41 MMTs. This triggered a strong rally in the canola futures as well as soybean oil. Canada’s wheat production was estimated at 27.01 MMTs which is in line with market expectations.
The EIA Ethanol Production report showed another increase in production and an unchanged supply. This was not far off from expectations and didn’t trigger a major market response. The FOMC Minutes caused a sharp decline in the US Dollar Index providing some underlying support to commodities in general. In their release they hinted to another round of quantitative easing (QE3) "soon" which is seen by many in the industry as inflationary.
Tomorrow morning we will have the Weekly Export Sales data at 7:30 am CST. The average guess for corn is 200,000 – 500,000 MTs, for beans 400,000 – 800,000 MTs, and for wheat 300,000 – 400,000 MTs. With the current USDA estimates for soybean production we obviously need to see a slowdown in export bookings to show demand rationing. Crush margins have been good and last week we saw another large sale number, which is partly why the price of November soybeans has rallied 93 ¼ cents in the past 7 days.
Chart: November Soybeans
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