Pressure continues from harvest weather and farmer selling before tomorrow’s USDA report.
Open harvest window and the 40 cent rally over the past month has opened up farmer selling ahead of tomorrow’s USDA report at 11:00 am Central leaving December down 4 ½. Market analysts are anticipating a drop in production to 13.504 billion bushel, from the September estimate of 13.585 billion. Average analyst yield guess for 15/16 is 167.1, off from the September estimate of 167.5 bu per acre.
Exports were on the low end of expectation for corn for the week ending October 1st coming in at 20.5 million bushels of corn. While corn relies on less than 13% of its production on exports – the weekly pace is easy for the market to measure and monitor and is behind pace as the US struggles to compete on the world market with the relatively high priced dollar.
Today’s release of Fed minutes showed a group of central bankers hesitant to raise rates while inflation is low. The minutes did little to provide clarity about when the central bank might pull the trigger on higher rates. It showed a board that was willing to wait for more signs of inflation, while acknowledging the US economy has made plenty of progress.
The US dollar index continues to show signs of weakness while the Brazilian Real, Canadian and Australian dollars all show signs of strength – positive trends for export competitiveness.
December crude oil was able to take out the spike high from the end of August, a positive sign to commodity traders on the attitude towards owning commodities. Stocks are trading higher and metals lower.
Soybeans weaken on pre-report selling and continued impressive yields in many areas.
Caution prevails ahead of tomorrow’s USDA report leading the soybean price down 9 ¾ on the close. Analysts are expecting a yield of 47.1, up 0.1 from September but a shrink in production to 3.908 from the September estimate of 3.935 due to a reduction in production acres.
Good yields continue to impress in many parts of the country but they are also being balance by surprising deviation in field-to-field yields and in planting date – keeping the question open of how persistent the yields can be as harvest progresses into the second half.
Sources from the floor have funds as sellers of 8,000 contracts. Technically the soybeans have run into – and failed at the trendline off July and August highs. Consolidation now for the 33rd day in soybeans seems to be building either a base or a ledge – USDA production estimates tomorrow could tip the balance. Irrespective of the current focus on production, the market will also be influenced by continued Chinese buying, reluctant farmer selling and a weakening dollar.
Wheat continues second day lower, off an overbought situation and fund/farmer selling.
Funds have added to the wheat selling after running into resistance two days ago. While weather remains a concern in Russia and the Midwest – forecast rains could put both crops in a better situation.
Egypt announced they are seeking 50,000 mt of wheat in a tender to close on Friday. Origins accepted include Australia, Argentina, Canada, France, Germany, Kazakhstan, Poland, Romania, Russia the Ukraine and the US.
Technically, the wheat chart is holding the up-channel and has not taken out the small swing low from Monday – the market is at risk of further weakness if weather keeps Russia and Australia out of the headlines and corn doesn’t receive supportive information from the USDA.
Futures follow through higher on uptick in cash market and investor interest in finding a bottom in beef.
Investors bet that demand for beef is likely to recover in coming weeks leading to continued strength in live and feeder cattle. Fears about slack demand for beef in the face of record pork and poultry production have been a drag on cattle until this week. Short fund positions and heavy recent losses have continued to support buying – in spite of the only modest gains in the beef market.
USDA showed wholesale choice-grade beef prices climbing $1.39 to $204.97 per hundred pounds, the largest increase in weeks. Select prices also increased to $198 per hundred pounds.
Closing Market Snapshot
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