EHedger Closing Grain Commentary 10/26/2011
Oct 26, 2011
Grains fell sharply today with corn down 13 ½ cents, beans down 15 cents, and wheat down 16 ¾ cents.
Every night we seem to be finding positive support but immediately met with sell pressure on the open of the day session. Again outside markets were unfavorable early but found plenty of support to finish the day. The Dollar still finished stronger and crude oil 2.40 lower and may have contributed to the downward pressure today.
US corn, soybeans, and wheat world demand is all rather week due to the fact we are being undercut by foreign competition. We haven’t even seen an offered price for Egyptian tender in months because we are so far under Russian and Australian wheat. Russia even sold corn to Spain today! Feed wheat is cheaper than corn, so for the first time in 3 years we are having massive worldwide competition. As long as this continues this demand is going to shift and is not something we are going to get back. On top of this, we are coming to expiration of the ethanol subsidies. I can see many reasons for this market to head lower, and unless yields come down a bunch, I don’t see a whole lot of reasons to go higher.
Technically December corn broke back below the 200 day moving average today as well as the near term trendline. This could cause further downside technical weakness for corn. Soybeans are trading well below their major moving average levels still and have recently given a bearish crossover on the Exponential Oscillator (see chart). We obviously look at fundamentals above all else but it just goes to show we are also finding some technicians that may also be selling into this market.
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Chart: December Corn
Chart: November Soybeans
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