Grains were wildly bullish today with corn finishing "limit up". The December corn contract settled at $6.45 (up 40 cents) and was limit up for the latter half of the day. November beans finished 58 cents higher at $12.35 ½ and December wheat 49 ¼ cents higher at $6.60 ¾.
The fact that we have been severely oversold in grains over the past couple of trading sessions caught up to the market, especially being a day away from the report. When we crossed the short term highs and traders had to start jumping out of short positions and buy-stops were triggered the market rallied further. Also, we have been discussing the 200 day moving average in corn being a significant level to make additional sales which is right at $6.45 ½. We rallied right to this level today and intrinsically traded just above it (see chart). Besides that there were no major news headlines to warrant such a rally today.
Crop progress was delayed until this afternoon and came out as follows:
Corn October 9th 5 year average
Mature 89% 88%
Harvested 33% 32%
Condition: Good-excellent gained 1 percent week-over-week now at 53%.
Soybeans October 9th 5 year average
Harvested 51% 46%
Condition: Good-excellent gained 2 percent week-over-week now at 56%
Winter wheat is now 59% planted which is behind the 5 year average of 67% at this time of year. It is 28% emerged compared to 38% on average.
The USDA Supply and Demand report will be released tomorrow morning at 7:30 am. The trade estimate for the 2011-2012 wheat ending stocks figure is 747 million bushels versus 761 million bushels a month ago. The corn production estimate is 12.492 billion bushels with a yield of 148.9 bpa (12.497 billion last month; 148.1 bpa). The corn ending stocks are estimated to be 795 million bushels versus 672 million bushels a month ago. The soybean production estimate is 3.094 billion bushels with a yield of 42.0 bpa (3.085 billion bushels last month; 41.8 bpa). Soybean ending stocks are estimated to be 181 million bushels versus 165 million a month ago.
We will have the report results and our reaction in tomorrow morning’s letter and automated phone call. Please call in if you would like to discuss the report.