Thursday Morning Grain Market Update...
Aug 30, 2012
Grains are mixed this morning after an impressive rally yesterday. The November soybean contract posted a new contact-high close yesterday; beans have emerged as the true bull market in the ag complex during the past several weeks as corn and wheat have been unable to even test recent highs. Wheat has exhibited strength on rumors surrounding a possible Russian export ban. Russian leaders will meet tomorrow to discuss their physical grain outlook. Many traders believe the potential export ban or restriction will not be initiated until early this winter. Early corn yields have been variable, but mostly within or slightly below expectations.
Export Sales this morning at 7:30am CST, pre-report estimates:
· Corn 250,000 – 400,000mt
· Soybeans 600,000 – 800,000mt
· Wheat 450,000 – 600,000mt
Soybean exports continue to run well ahead of schedule. More than 55% of projected new crop exports have already been booked vs. an average near 30% for this point in the marketing year. Soybean demand has proven to be much more inelastic than demand for corn or wheat, both of which have clearly lost a significant portion of their demand base as a result of high prices.
Traders around the world will be watching Fed Chairman Bernanke speak in Jackson Hole, WY tomorrow. Many financial traders still believe a QE3 scenario is in the near future. The Jackson Hole Economic Symposium is an annual meeting that is hosted by the Federal Reserve Bank of Kansas City. Outside markets are mostly mixed this morning ahead of tomorrow’s speech. Equities are marginally lower along with crude and metals. The euro is slightly higher.
Weekly ethanol production was down 4,000bpd at 819,000bpd. The EIA reported ethanol stocks at 18.4mil/barrels, down 1,000 from last week. Ethanol numbers have essentially leveled off during the past 3-4 weeks after a record low number was posted several weeks ago.
Export Sales this morning, first notice day for September futures tomorrow. USDA’s September Crop Production report will be released on the 12th. We look for soybeans to make new highs this week or early next week. Corn and wheat may be range-bound until we know more about the corn crop and the state of both domestic and foreign demand for corn. $17.60 is a key level in Nov beans. The $8.35-8.40 area will be key resistance for the corn on any major rally. Wheat has consistently been a "sell" above $9.00 in the December contract.
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