EHedger Afternoon Grain Commentary 12/11/12
Dec 12, 2012
The initial reaction to the USDA report was mixed-friendly corn and soybeans and bearish wheat.
Traditionally the December WASDE report is not a major market mover. Traders were expecting corn exports to decrease but they kept demand numbers unchanged in the US. This was considered supportive for corn and price action remained stable even through the massive selloff in wheat.
Wheat’s export demand was actually lowered by 50 million bushels which lowered wheat carryout by the same amount. This was enough for price to fall below the long term trendline support. When 9:30 am arrived we had a sharp spike in volume and another major selloff. It appears the algorithmic (computer based) trading is still waiting until the 9:30 timeframe before turning on (see charts).
Daily March Wheat Chart
15-Minute Bar March Wheat Chart
Soybean carryout fell right in line with expectations at 130 million bushels and left beans mostly unchanged for the day. Soybean production was left unchanged at 55.0 MMTs in Argentina and 81.00 MMTs in Brazil. Estimates were calling for slight decreases for both. Corn production was lowered by 0.5 MMTs to 27.5 in Argentina and left unchanged in Brazil at 70.0 MMTs. Chinese corn production was raised by 8 MMTs which was rather surprising.
The forecast reduced some rain in northern Argentina early next week but increased rains in the 7-14 day forecast in the southeastern portion of the country. Brazilian weather remains favorable.
NOPA crush will be released on Friday at 7:30am. November’s crush number was higher than expected and we have to start seeing more rationing. With the sale of 115,000 MTs of beans to China this morning and rumors of more today we continue to see strong demand. Friday’s report will be a big indicator for soybeans.
USDA REPORT SUMMARY
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