December corn and November soybeans both finished 9 ½ cents lower while December wheat finished 11 ¾ lower. Coming into the grain session open the US dollar was at its day highs approx 700 points higher. This on top of corn’s key reversal yesterday helped spur weakness across the board.
Tomorrow the weekly exports will be delayed until Friday due to the holiday. We will have normal trading hours for grains. I will have the export estimations out in tomorrow’s afternoon letter.
The market was expecting the WASDE report to show bean yield at about 44.6 and it came out at 43.9. The carryout was also sharply below estimates at 185 million bushels. This was the main cause for soybeans’ strength yesterday and puts beans in an edgy situation. The more bullish information coming in for soybeans, the more touchy the market will be to the upside. This puts extra emphasis on South American production, so any major changes in S.A. weather will be watched closely.
For corn the USDA yield was 154.3 which was right in line with what the market was projecting. The average estimate for corn carryout was 840 million bushels but the actual was 827 million. Yesterday’s reversal in corn was on record volume and record open interest. Even though the fundamentals remain strong for corn it wouldn’t take much imagination to see a selloff from here.
For now the markets seem to be following the inverse of the dollar and taking a breather. Front month corn contracts are taking the brunt of the weakness while the back months will likely remain supported to keep acres for next year. One thing to watch is cotton. Cotton has been on an unbelievably sharp rally since this summer. Today was a major key reversal in cotton and since it will be competing for acres with beans next year it will be one to watch in case of a major switch in the trend.
Another reason we wouldn’t be surprised to see a setback going into the end of the year is many times you see a selloff between now and the holiday’s as traders close out positions and lighten up before years’ end. We recommend staying with our current hedge recommendations.
Jay and Jimmy on Obama's India Visit
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