Corn and soybeans sold off heavily on Friday after higher production estimates were released from Informa and FC Stone. December corn closed 11 ½ cents lower at $7.39 ½, January soybeans 33 ¼ cents lower $15.26 ¾, and December wheat down 4 cents at $8.64 ½.
Corn had a rather perfect storm of bearish news today to push us below the 100 day moving average for the first time since June 18th 2012. The Deutsche Bank roll started which consists of selling December 12 corn to buy December 13 corn. That spread was down as much as 12 ¾ cents today. We also had bearish private production estimates, poor weekly corn sales and very weak outside markets.
FC Stone released their estimates yesterday after the grain close. Informa released theirs today at 10:30am. Both estimates were considerably bearish and the market did not discount them. I have included the new estimates below in comparison to last month and to the current USDA estimates.
Along with the estimates we also had very weak outside markets forcing liquidation in grains. Crude oil was trading as much as 2.43 lower down to a low of $84.66. Silver was $1.30 lower, Dow Jones over 150 points lower, and the US Dollar was sharply higher. These are all signs of risk-off trading which is probably related to next week’s election uncertainty, especially after a favorable jobs report today.
Weekly export sales were delayed until this morning. The results continue to flow in poor for corn, strong for soybeans, and as expected for wheat.
Technically this was a "bearish" close for corn. This is the first time we have settled below the 100 day moving average since June 18th (see chart)!
The next USDA report will come out on Friday, November 9th. If the USDA estimates fall in-line with these private estimates the extra supply may be enough to take us back to the recent lows. If the USDA remains neutral I believe we will stay range-bound until we get to the January reports. Domestic basis remains strong for corn and exports remain strong for soybeans. To receive a free trial of our commentary including hedge recommendations please follow the link below.
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