USDA Oct. Reports Out of the Way, Focus on Seasonal Lows

06:09AM Oct 13, 2011
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What Traders are Talking About:

* USDA sees smaller corn and bean crops in October. Traders are still digesting USDA's October crop report data in which USDA lowered its corn crop estimate to 12.433 billion bu. and raised its 2011-12 corn carryover projection to 866 million bushels. The corn carryover peg came in higher than expected, which pressured corn futures Wednesday, although they finished relatively decent. Perhaps the bigger surprise, however, was that USDA lowered its soybean crop estimate to 3.060 billion bu. and lowered its 2011-12 soybean carryover projection to 160 million bushels. That allowed soybeans to finish mostly firmer yesterday. Wheat futures faced heavy pressure as the ending stocks projection was unexpectedly raised.

The long and short of it: USDA's report data was generally negative for corn (especially on the heels of Tuesday's limit-up performance), bullish for soybeans and bearish for wheat.

* Hunt for a seasonal low. Now that USDA's October crop reports are out of the way and with harvest rapidly progressing, focus will be on when corn and beans put in seasonal lows. That may have already happened, as both markets are trading well above lows posted earlier this month. But there's likely to be at least one more push to the downside, that may or may not take out the previous lows, just to make those traders who have loaded up on the long side of the market over the last week a little uncomfortable.

The long and short of it: Given the increase in end-user buying and active bargain hunting over the last week, the process of putting in a seasonal low appears to be well underway.

* Slovakia appears ready to approve EFSF change. Just one day after voting against ratifying the European Financial Stability Facility (EFSF), Slovakia is set for another vote on the issue today. This time, it's expected to pass. That would mean all 17 members of the euro-zone will have approved expanding the emergency fund, clearing the way for European leaders to better attack the financial crisis.

The long and short of it: Attitudes toward the European financial situation -- and the macro-economic environment in general -- have improved dramatically this week, but there are still many hurdles ahead.


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