Grains and oilseeds closed mixed after a choppy trading session. The funds have started their rebalancing which supported soymeal and Kansas City wheat while they sold corn, soybeans, Chicago wheat and soyoil. Corn managed to hold support which may be attributed to the fact that we are once again competitively priced in the world market. We have no major changes to our current hedge recommendations.
Soybeans had an intra-day market surge after rumors of China buying (up to 6) cargoes of beans started to circle. As always we want to wait for confirmation from the USDA before accepting these statements as fact. After we get through Wednesday and Thursday’s fund rebalancing all eyes will shift back to the January USDA reports.
Trade Estimates for Friday’s USDA Reports
| Trade Estimates for US Dec. 1 Stocks | ||||
| Average | Range | Dec 1, 2011 | Sept 1, 2012 | |
| Wheat | 1,684 | 1,553-1,750 | 1,663 | 2,104 |
| Corn | 8,219 | 8,000-8,750 | 9,647 | 988 |
| Soybeans | 1,981 | 1,800-2,100 | 2,370 | 169 |
| Trade Estimate for US Crops | ||||
| Average | Range | 2012 | 2011 | |
| Corn | 10,650 | 10,325-10,800 | 10,725 | 12,358 |
| Corn Yield | 122.6 | 121.3-125.0 | 122.3 | 147.2 |
| Harvested Acres | 86.89 | 84.56-87.72 | 88 | 83.981 |
| Soybeans | 2,993 | 2,935-3,104 | 2,971 | 3,094 |
| Soybean Yield | 39.6 | 38.9-41.0 | 39.3 | 41.9 |
| Harvested Acres | 75.56 | 74.70-75.90 | 75.693 | 73.776 |
| Trade Estimate for U.S. 2013 Ending Stocks | ||||
| Average | Range | 2013 | 2012 | |
| Wheat | 741 | 637-792 | 754 | 743 |
| Corn | 647 | 489-760 | 647 | 988 |
| Soybeans | 135 | 114-186 | 130 | 169 |
| Trade Estimates for US Winter Wheat Acres | ||||
| Average | Range | 2012-13 | 2011-12 | |
| All Winter | 42.585 | 41.700-44.650 | 41.324 | 40.646 |
| Hard Red | 30.296 | 29.900-31.000 | 29.863 | 28.480 |
| Soft Red | 8.898 | 8.217-10.000 | 8.120 | 8.561 |
| White | 3.474 | 3.300-3.920 | 3.350 | 3.360 |
Friday is one of the most important report days of the year as it sets the tone for early 2013 trading. The USDA will release their final acreage and bushels for 2012, Winter Wheat Seedings, and the December 1st grain stocks. The January reports have resulted in a limit move in corn 4 out of the last 5 years! Final acreage, final yield, a full quarter of demand, and estimating total bushels in transit make it almost impossible to get an accurate guess for final quarterly stocks in December for corn and soybeans.
Informa’s estimates for 2012 corn and soybean production are still much higher than the current USDA estimates.
· Informa corn production estimate = 10.8 billion USDA currently at 10.725
· Soybean production estimate at 3.04 billion USDA currently at 2.971
Corn exports have been extremely dismal and ethanol’s production pace hasn’t been great either. We believe the market has done its job rationing demand and we shouldn’t see an overly bullish response for corn unless it comes from lowered production. With that being said we have already had a significant correction in the last 30 days and are once again competitive in the world market.
Soybean export pace has been running at a record from strong Asian demand, despite the recent cancellations. Crush has been running very strong as well. Any bullish market surprises would have to come in lowered production in my opinion because the strong demand has already been noted by the market.
Techincals
March Corn is in a downtrend and looks technically "bearish" but we are coming off of oversold levels.
March Soybeans also in a "bearish" downtrend. They have made a double bottom but watch out if that level is breached again.
March Wheat has had the largest selloff and is very oversold. Wheat techincals are still pointing lower but if an upside breakout does occur we expect it to be strong.
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Best Regards,
EHedger
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