Nary a bull to be found

Published on: 14:43PM Sep 19, 2014


Without some type of miraculous recovery today, the wheat market will have closed lower for the fourth week in a row and at the lowest level for a spot contract since June 25th, 2010. With the exception of dryer than normal conditions in Australia, just about every news item is negative. After showers pass through this weekend the weather outlook appears conducive to wrap up harvest of the spring wheat, export sales were sub-par yesterday morning at 11.6 million bushels with little interesting in the lineup and of course, stiff competition in the international markets as France and Russia aggressively market their crops. Without bearish news we would not have any it seems.

I intend to expand on this theme a bit more in the weekend comments but it would appear that we are reaching the point in not only wheat but commodities in general that everyone has given up hope. All they can envision is low to no inflation and declining prices ahead. For me, that begins to raise a big warning flag. This is not to say prices will not head lower for the near-term or that it can identify a specific point in time for which we will turn around, but this is the kind of attitude that develops and exists when you are approaching lows in markets. As one of my favorite saying goes, when everyone is thinking the same way, no one is thinking and once that happens, we will miss subtle changes that are taking place in the undercurrent.

Keep in perspective as well that markets always overshoot be that at bottoms or top so for now, we need to remain patient as the market demoralizes the last of the bulls.


While weak, the corn market has still been resistant to pressing into lower lows but with the selling witnessed this morning, it would appear that we will put that to test for the weekend. Here are well we are struggling not only with the weight of a potentially larger crop but the overall negative attitude toward commodities in general.

Export sales last week were Ok, coming through at 26 million bushels. This brought the marketing year to date figure up to 513.3 million bushels so we need to average just 24.7 million per week to reach the target of 1.75 billion. The most discouraging aspect of this is that we really need to boost that number closer to the 2 billion bushel level to lift prices away from the basement. The USDA did announce a sale this morning of 376k MT of corn to Mexico.

The most positive news I have seen in the past 24 hours is the fact that the CME lowered margins on corn from $1500 to $1250 per contract. While this may not sound like a big market influence and reflects the lack of volatility we currently experience, traditionally this has been once of those minor flags that is waved when you begin approaching lows.

After showers pass through the Midwest this weekend, the outlook appears to be nearly ideal to put the finishing touches on the corn market. With ample moisture already present we should potentially be building test weight, which would be that final essential step for maxing out the yield this year. It would appear that the harvest should really kick into gear once the calendar rolls over to October.

Later this morning Informa will be releasing their initial estimates for corn and bean acreage for 2015. While this will only the opinion of one company and should not be a market mover, it should provide an interesting base from which to begin discussions about next year.


Solid export sales yesterday of 53.9 million bushels were ultimately not enough to support the bean trade nor was a sale announcement this morning of another 1.236 MMT or 45.4 million to China as prices have now extended into lower lows for the year. With a clear forecast in the weeks ahead the trade will be looking for harvest to kick into high gear. Yield reports from areas in the south continue to be outstanding with 60 to 90 b/p/a’s commonly heard.

The CME also cut margin on beans, moving from $3000 to $2500 and meal from $1500 to $1300. As I commented under corn, traditionally you begin to see margins reduced as you approach lows in markets but the key word to keep in mind here is “approach.”

The Informa estimate for 2015 beans should be particularly interesting as we will potentially be coming away from a huge record acreage of 84.8 million this year. With 9.75 new beans versus 3.80 new corn, will many intend to cut back on the beans? A topic of debate for another day.