| |
CYTRADE Financial Services including FOREX, Online Trading,
Managed Futures , Full Service Brokerage, Trading Programs and International Desk
|
|
|
Funds may be active on last trading day of the month
A mostly higher start is expected this am, 5-10 in wheat and beans, steady/mixed corn. The $ is slightly lower this am, which could lend support to all the grains.
Deliveries totaled 4900 wheat to Nov 27, just 3 corn, to March 2 and 2800 oil to Nov 12. There were no meal deliveries, as expected. Dreyfus stopped (took delivery) 1028 of the wheat, which might lend some support to the Dec on a spread basis today. The near total absence of deliveries against Dec corn helped it gain on a spread basis vs the other months overnight and could do so today as well.
Corn harvesting this afternoon is likely to be reported between 75-80% complete with beans over 95% done.
The Commitment of Traders report will be out this afternoon, delayed from Friday afternoon by the Thanksgiving day holiday.
Dalian, China grain futures were higher today with beans making new highs for the year following fund buying. The Chinese government announced policies designed to boost domestic bean prices, which was thought to be at least partly behind the increased fund support.
Today is the last trading day of the month, a day on which the funds reputedly are more active. Traders remember the first couple days of Nov, when large scale fund buying swept prices much higher and some traders think the same thing is going to happen the first few days of Dec. This belief could make some traders reluctant to sell ahead of this expected large scale, aggressive fund buying, which it is thought will start tomorrow.
Argentine grain areas benefited from up to 1.5" of moisture over the weekend but mostly dry weather is forecast this week. Way too much rain continues falling in Rio Grande state in far southern Brazil, the third largest bean producing state in the country. Up to 2" of rain was seen this weekend and up to 1.5" is forecast today-Wednesday before dry weather finally moves into the state the second half of the week. The rest of Brazil remains in very good shape overall weather-wise.
Generally dry weather was seen over the weekend in the Midwest. The western half of the belt will be mostly dry this week. The eastern half will be dry until mid week, when scattered, light precipitation in the form of rain or snow is likely in the southeast part of the region. The 6-10 day predicts generally below normal precipitation. Corn harvesting should proceed rapidly in most of the Midwest this week. Mostly favorable conditions remain in the southwest winter wheat belt.
Dubai debt crisis triggers worldwide sell off
A lower start is expected in all pits following the worldwide equity sell off due to the debt crisis in Dubai. Apparently, Dubai is asking for a 6 month delay in repaying roughly $60 billion in debt and this triggered a massive wave of selling in equities/buying of the $, which is still viewed as a safe haven during economic crisis, around the world today. The $ is sharply higher as a result and almost all commodites are sharply lower, including metals, such as gold, energy, such as crude oil, and grains. The early call is 12-15 down in wheat, 10 lower in corn and 20-25 off in beans.
Traders will monitor the Dubai situation and watch the $ today for guidance in the grains. The floor will close at noon today, US Central time.
Weekly export sales were in line for wheat at 351,000 tonnes, and meal at 225,000 tonnes. The rest were very good: 1.224 million tonnes of corn, 1.135 million tonnes of beans and 19,000 tonnes of oil. Actual bean exports were 2.435 million tonnes, a high for the marketing year, which began Sep 1. Of the 2.435 million tonnes, 1.835 million went to China. The Buenos Aires Grain Exchange reported 11% of the Argentine wheat crop has been harvested while 72% of the corn and 50% of the beans have been planted so far this season. The exchange cut its wheat production guess from 7.75 million tonnes to 7.5 million.
Up to 1" more beneficial Argentine rain is forecast today through Sunday, favoring northern and eastern areas. More rain is forecast mid next week. Good growing conditions continue in Brazil although there is too much rain in Rio Grande state in the south.
The US Midwest saw modest, scattered rain the last 48 hours, favoring the eastern half of the belt. The Midwest will be generally dry today-Wednesday next week, allowing corn harvesting to make rapid progress and bean harvesting to finish. However, the 6-10 day calls for above normal rain in the southeast part of the belt, which will delay any left over harvest there.
Weak $ should encourage buying in the grains
A higher start is forecast this am, 10-12 wheat, 5-10 corn and 7-10 beans. The $ is very weak and this should encourage buying in all the grains as a weak $ makes US grain exports more competitive in the world market.
Egypt is in the market for wheat this am with results expected shortly before our grain opening. They are not expected to buy any US wheat as our prices are still too high relative to other countries.
Monday is first notice day for Dec deliveries.
There is a strong seasonal tendency for beans (and to a lesser extent corn) to close higher today, the day before Thanksgiving. This has happened roughly 75% of the time over the last 30 years or more.
Weekly Export Sales will be out Friday am and the Commitment of Traders report will be out Monday afternoon.
The USDA announced the sale of 100,000 tonnes of US wheat to Iraq this am. The Census Bureau Oct crush was in line, 163.1 million bushels. Oil stocks were a little less than expected, 2.727 billion lbs but meal stocks were higher than expected, 445,000 short tons.
Favorable weather continues in Argentina with up to 1.5" in Buenos Aires province the last 24 hours. More beneficial rain is forecast in northeastern grain areas today and again over the weekend. Brazil will see widespread but scattered rain today-Friday. More is forecast this weekend into early next week in Rio Grande and Parana states. Too much rain has fallen in Rio Grande but overall Brazilian conditions remain favorable.
The US Midwest saw scattered rain the last 24 hours, up to 1" in the west, up to 3/4" in the east. Light precipitation is forecast today in the west, today-tomorrow in the east, followed by generally dry weather for a day or two. Additional precipitation in the form of rain or snow is forecast in the east early next week. This isn't a problem for beans but it will further slow corn harvesting.
Slightly lower grains start likely
A slightly lower start is likely this am, 1-2 in wheat and corn, 3-5 in beans. The $ is just a shade lower this am, not enough to impact the grains much either way.
Corn harvest progress was 68% complete vs 94% average while beans were 94% done vs 97% average. Winter wheat planting reached 93% vs 97% average. Emergence was 84% vs 90% average.
Jan beans just missed taking out their August high yesterday and when they couldn't do this the selling started, eventually sending beans, as well as the rest of the floor, lower. The upper 10.60's now represents strong overhead resistance in Jan beans.
The USDA attache in Brazil estimated the 2009-10 Brazilian bean crop at 63.6 million tonnes vs the current USDA guess of 63 million.
There is a strong seasonal tendency for beans to close higher the day before Thanksgiving and a modest seasonal tendency for them to end higher the day after Thanksgiving. Over the last 30 years or so, beans have ended higher the day before Thanksgiving roughly 75% of the time. Buy Jan beans on the close today and sell them on the close tomorrow if you want to take advantage of this tendency.
Argentina will benefit from up to 1.5" of rain in the southwest part of the grain belt today with this rain spreading to the north and east by tomorrow. More welcome rain is predicted Sunday. Too much rain continues falling in southern Brazil, specifically Rio Grande state, the third largest bean producing state in Brazil. Overall, conditions remain very favorable, however, in both Brazil and Argentina.
The Midwest US saw scattered rain the last 24 hours, especially in the western half of the belt where up to 3/4" fell. Rain will be scattered across the Midwest today, lingering into tomorrow. More unwelcome Midwestern rain is forecast Sunday. The 6-10 day predicts above normal rain, especially in the southeastern part of the belt, which will delay late corn harvesting.
Weak $ to boost grains
A higher start is forecast in all pits this am, 10-15 wheat, 5-7 corn and 20 beans. The very weak $ is behind the expected big gains in the grains. Other commodity markets as well as equities are reacting bullishly to the weak $ also this am. The last four trading days of last week beans moved in the same direction as the $ but that doesn't seem to be the case this am.
The Weekly Harvest Progress report late this afternoon is likely to show corn harvesting roughly 2/3 done with beans almost complete along with winter wheat planting.
Australian wheat stocks were 3.7 million tonnes at the end of October, almost twice their year ago level and a reflection of the fact there are plenty of wheat supplies around the world. US wheat prices remain too high priced relative to our competitors but the sinking $ is lifting wheat values anyway, at least for now.
Up to 6" of unwanted rain fell in southern Brazil over the weekend but only up to 1" was seen in the north during this time. More unwanted rain is forecast this week in southern Brazil, which will slow bean planting efforts. Some rain is also forecast in central and northern Brazil the next few days. Argentina was mostly dry in the southwest over the weekend but light, scattered rain fell in northern and eastern parts of the country. Up to 3/4" scattered, beneficial rain is forecast tomorrow, favoring northern and eastern areas although some welcome rain is also expected in the southwest region.
The southwest US winter wheat belt was mostly dry over the weekend, allowing late planting efforts to progress. Light, scattered rain is predicted in the northeast part of the belt today-tomorrow before dry weather moves in the second half of the week. The Midwest had a mostly dry weekend, helping late bean and corn harvesting efforts. Up to 1" rain is forecast in the west tonight-tomorrow with dry weather the second half of the week. The east will see scattered rain tomorrow-Thursday. The 6-10 day forecast is for above normal rain, which could slow late corn harvest progress.
$ strength to weigh on commodities
Prices were mostly lower overnight and that is the early call this am, 5 down in wheat, 3-4 off in corn and 1 lower beans. The $ is strong this am and this is expected to weigh on commodities in general, not just grains. Up until this week, grain prices usually moved in the opposite direction of the $. However, the last three days bean prices have moved in the same direction as the $, throwing doubt on the correlation between grain prices, at least in the case of beans, and the $. There is little in the way of fresh news this am outside of the $ and the weather.
Conditions remain very favorable overall in Brazil although there is too much rain in the southern Brazilian state of Rio Grande do Sul, the third largest bean producing state in the country. Argentine weather has improved considerably this week with widespread rain. It will be mostly dry in the main Argentine grain growing provinces of Buenos Aires, Cordoba and Santa Fe today through Sunday but fairly widespread rain is forecast Mon-Tue with moderate to heavy amounts, which will be very welcome.
The US midwest was mostly dry yesterday and more of the same is predicted for the weekend before scattered precipitation in the form of rain or snow moves into the belt early next week. The 6-10 day calls for below normal precipitation in the west, above normal in the east. Bean harvesting won't be affected very much since it is almost complete but there will be some harvest delays next week in corn.
Outside markets indicate lower grains start
A lower start is indicated by the slightly higher $, lower gold and crude oil markets as well as overnight losses in the grains. The early call is 12-15 down in wheat, 5-7 lower corn and 7-10 off in beans.
Egypt is in the market for optional origin wheat and results should be out before the grain opening. It is doubtful Egypt will buy any US wheat since our prices are not competitive in the world market.
Weekly export sales were mixed: in line for wheat, 362,000 tonnes, and oil, 12,000 tonnes; slow for corn, 353,000 tonnes; and very good for beans and meal, 1.350,000 tonnes and 357,000 tonnes, respectively. I was told the Census Bureau Oct crush would be out this am but that apparently is not the case this am.
Argentine crops benefited from up to 2" of rain scattered over parts of the grain belt the last 24 hours. The forecast calls for mostly dry weather the next several days but widespread rain is possible again early next week, which should help keep crops in good shape overall. Conditions remain favorable also in most of Brazil although some areas, especially in the southern part of the country, have had too much rain recently and more is forecast there the next few days.
The US southwest was generally dry the last 24 hours and will remain this way today through Tuesday next week, allowing winter wheat planting to finish. The midwest saw only light, scattered rain in the west the last 24 hours with up to .6" in the eastern half of the belt during this time. The midwest will be mostly dry the rest of this week into early next, helping speed up corn harvesting and finish bean harvesting. The 6-10 day predicts below normal rain in the west but above normal in the east.
Grains rally is difficult to explain
The early call is roughly 3 higher in wheat and corn, 15 up in beans.
The upward march of commodities in general continues this am with crude oil, gold and grains all higher overnight following the lower $. Of course, most commodities were higher yesterday too despite the higher $ so there is something else in the market. Funds continue buying, representing fresh spec money that perhaps wants to own commodities as a hedge against inflation. The Baltic Exchange main sea freight index keeps shooting higher, reflecting increased demand to move freight around the world, hopefully a bullish sign for the overall world economy (and grains). Otherwise, it is difficult to explain this rally. US wheat, for example, is way overpriced compared with other countries yet it keeps rocketing higher. Yesterday, for the second day in a row, wheat volume (pit and electronic combined) was greater than beans - up until now a very rare event.
Up to 1" more beneficial rain fell in parts of Argentina's grain belt the last 24 hours. Additional welcome rain will fall today-tomorrow and again early next week, improving the outlook for Argentine crops. Brazilian weather remains favorable as well.
Rain is forecast to return to the US delta this weekend, slowing late bean harvesting again. Light, scattered rain fell in parts of the western midwest the last 24 hours. Up to 3/4" was scatterd over the eastern midwest during this time. The west will be mostly dry today through Sunday but the east will see rain today and tomorrow with dry weather the rest of the week. The 6-10 day predicts wetter than normal conditions, which will further slow corn and late bean harvesting.
Turn around Tuesday likely in grains
It's Tuesday and the market appears poised to undergo another "turn-a-round Tuesday" pattern where prices reverse course from Monday's direction. This means we will be lower initially, as was the case overnight. The $ has reversed course from yesterday with a vengence, trading considerably higher this am. This strongly encouraged overnight selling in all the grains and a similarly lower start is likely this am, roughly 5 cents in wheat, corn and beans. Traders will be watching the direction of the $ closely again today for guidance in the grains.
The weekly crop progress report showed bean harvesting a little less than expected at 89% with corn in line at 54%. Normally, beans should be 96% done by now with corn usually 89% complete. Winter wheat planting hit 90% vs 95% average. Emergence reached 77% vs 87% average.
Earlier this month, the USDA raised its Argentine bean crop guess to 53 million tonnes from 52.5 million in October. However, others are going in the opposite direction - the Rosario Grain Exchange in Argentina cut its estimate to 47 million tonnes while Oil World, the widely followed analytical firm, cut its guess to 48 million tonnes from 50 million estimated a couple of weeks ago and 52 million last month. Dry weather is behind the lower estimates but there is a change in the forecast that could boost the outlook for Argentine crops.
The USDA this am announced Mexico bought a total of 210,000 tonnes of US corn, 132,000 tonnes for the 2009-10 crop year and 77,000 tonnes for the 2010-11 crop year, which starts Sep 1, 2010.
Meteorlogix Weather says up to 1" of much needed rain fell the last 24 hours in southwestern Buenos Aires province which up until today was the driest part of the Argentine grain belt. The forecast calls for widespread rain over most of the Argentine grain belt, including the three main growing provinces of Buenos Aires, Cordoba and Santa Fe, with up to 1.5" of moisture between today and Thursday before drier weather returns. This rain will be vital in helping Argentine crops and should be very beneficial.
The US midwest saw scattered up to 1.5" rain the last 24 hours. Up to 1.5" light rain is forecast in the western half of the belt today with heavier, scattered rain in the east the next 2 days. This rain is unwelcome as it will slow corn and late bean harvesting once again. The 6-10 day calls for above normal rain, which could further delay harvest progress, especially for corn.
Higher grains start forecast following overnight gains
A higher start is forecast this am following overnight gains. The $ index is weak while gold, crude oil and equities are all higher, which will encourage buying in all the grains this am. The early call is 7-8 better wheat and beans, 5-6 higher corn. Traders will once again be keeping a close watch on the direction of the $ for guidance in the grains during the course of the session.
The National Oilseed Processors Association October crush report was much larger than expected, 155.3 million bushels, but oil stocks were only slightly larger than forecast, 2.286 billion lbs. This report will lend support to the bean complex today.
A senior Indian government official said India has no plans to import wheat this year, refuting talk late last week that India could import as much as 1 million tonnes of wheat by March.
Up to 7" of very heavy rain fell in southern Brazil over the weekend which will slow planting in this region. Mostly dry weather is forecast in the south this week but heavy rain could return to the south by this coming weekend. Parana, in central Brazil, will see heavy rain the next couple of days. The northern states, such as Mato Grasso, had a dry weekend and favorable weather is forecast this week. Conditions remain very good overall in Brazil. Argentina had up to 1.5" welcome scattered rains in the northern half of the country over the weekend. The southern half of the nation had only light weekend rains. More rain is forecast in the north this week but the south will be mostly dry.
The US southwest saw scattered weekend precipitation and more is forecast today. It will be mostly dry the rest of the week after today but the 6-10 day predicts above normal precipitation. Overall, conditions remain favorable in the southwest for the winter wheat crop. The midwest saw light, scattered weekend rain. Up to 1.5" of precipitation is forecast the first half of the week in the west, especially the southern half. The east will see up to 1.5" of precipitation today-tomorrow. The midwest will be mostly dry the second half of the week. The 6-10 day calls for above normal precipitation. All this moisture, either in the form of rain or snow, will not be a problem for beans, which are mostly harvested. It will be a problem for corn, with roughly half the harvest still to go.
Lower $ supportive for grains
A mixed start is likely this am, 2-4 down in wheat, steady/easier corn and 5 higher beans. The $ is a little lower this am, a supportive influence for all the grains.
India imported a small quantity of Australian wheat, India's first wheat imports in 2 years. It is cheaper to import wheat into southern India than buy domestically produced wheat, whose price is set by the Indian government. If the Indian government relaxed strict import rules, Indian traders think as much as 1 million tonnes of wheat could be imported by March. This is despite the fact India has a large stockpile of domestically produced wheat. Currently, Australian wheat imported into southern India, including cost and freight, is about $270-300 vs domestically produced Indian wheat around $330-350.
The Baltic Exchange main sea freight index, a barometer of world international trade and the world economic situation, reached its highest level since early June, closing at 4111 today. This is due to growing Chinese raw materials demand. It could be a sign all commodities, including grains, will be rising.
Weekly export sales this am were in line for wheat at 412,000 tonnes, and corn at 488,000 tonnes. Beans were very good at 1.272 million tonnes, thanks to China taking 961,000 tonnes. Meal was also good at 224,000 tonnes. Only oil was slow at 5800 tonnes.
A factor in the market overnight was yesterday's fear of widespread vomitoxin comtamination in corn and distillers dried grain, which is a by product of ethanol manufacturing and widely used as livestock feed in place of meal. Corn was steady/easier while beans and meal were higher, similar to the market's reaction to the vomitoxin story yesterday.
Some much needed rain is forecast next weekend in the dry areas of Argentina, including the southwest part of Buenos Aires province. Scattered rain is forecast the next several days in other main grain areas of the country, all of which will be welcome. Brazil and the southwest US winter wheat belt remain in very good shape overall with ample rain.
The Midwest will stay mostly dry until Mon-Wed next week in the west and Tue-Thur in the east, when rain is forecast to move across much of the belt. This will be only a minor delay for beans as most of the crop will be harvested by then. Corn harvesting will still be going on, however, and this will be a bigger problem for this crop.
Higher dollar weighs on grain overnights
A lower start is expected this am, 7-8 cents in wheat, corn and beans. The higher $ weighed on prices overnight and will do so again this am, possibly sparking widespread spec long liquidation as well as bringing new shorts into the market. There isn't a lot of fresh market moving news.
Egypt is in the market for wheat this am but they are not expected to buy any US wheat since it is too expensive relative to other origins. Weekly export sales were delayed until tomorrow am as the USDA was closed for the Veteran's Day holiday Wednesday.
Starting Monday, March corn replaces Dec on the top step of the pit that day.
The Dec oil share closed at 39.75% yesterday, its highest level since May as oil continues gaining strongly vs meal.
Vague talk about China possibly loosening control of the won vs the $ might be behind the strengthening of the $ yesterday and this am. Whatever the reason, a higher $ is strongly correlated with lower grain prices so traders will keep watching the machinations of the $ closely for signals of the grain's direction.
The main Argentine grain areas will see light, scattered but still welcome rain over the next several days with the exception of southwest Buenos Aires province.
The US midwest should remain mostly dry the next couple of days but light,scattered rain is forecast this weekend, slowing, but not halting, corn and late bean harvesting. Heavier rain than forecast yesterday is now predicted in much of the Midwest early next week, Sun-Mon in the west, Mon-Tue in the east. This will delay harvesting, especially of corn. Beans will be mostly harvested by early next week but not corn. Roughly 90% or more of the bean harvest is likely to be reported complete in this coming Monday's weekly harvest report but only around 50% of the corn.
Outside markets should lend support to grains
A higher start is expected this am, 5-7 wheat and beans, 2-3 corn. The $ is a little lower while crude oil and gold are higher, which should lend support to the grains this am. There isn't a lot of other news this am so we will probably continue to focus on the weather, the $ and the funds for direction today.
ADM put out 220 of the 230 bean deliveries this am, which is negative for the nearby bean spread.
Argentine grain areas will be mostly dry until early next week, when some much needed rain is forecast. However, southern Buenos Aires province, a major grain growing area, will remain mostly dry the next 7 days.
The US midwest will continue enjoying favorable harvest weather through Sunday. Some light rain is likely early next week and the 6-10 day calls for above normal rain in the southeast part of the belt but below normal in the northwest part. A similar pattern is forecast in the delta, where dry conditions are forecast through Sunday, followed by light rain early next week. Some corn and bean harvest delays are possible but rapid progress should be seen both before and after this light rain event.
Crop progress in line with trade expectations
Weekly harvest progress was in line with trade expectations yesterday afternoon at 75% in beans vs 92% average and 37% in corn vs 82% average. Winter wheat planting was 86% complete vs 93% average with emergence 71% vs 82% average. The $ is a little higher this am, not providing any support for the grains. Prices were steady to mostly lower overnight in the grains but this means little ahead of the USDA report this am.
The head of the Environmental Protection Agency said the EPA might not make a decision on whether to increase the amount of ethanol blended into gasoline by the Dec 1 deadline.
The southwest winter wheat belt will be mostly dry until Fri-Sat, when light rain is forecast. The 6-10 day calls for below normal rain. This generally dry outlook should allow planting to finish up. The Midwest will stay mostly dry until Friday, when modest rains are forecast in the west, moving into the east over the weekend. Additional rain is forecast in the west early next week but the 6-10 day this am predicts below normal rain. The two main weather models, the US and European, disagree regarding the 6-10 day outlook so there is more uncertainty than usual in the longer range outlook this am.
HIgher grains start expected from weak dollar
A higher start is expected this am due almost entirely to the weak $. Crude oil, gold and various other commodities markets are all higher due to the big losses this am in the $ and grains are likely to follow suit. The weather is bearish and without a much weaker $ grains would probably be lower so traders will keep a close watch on the $ for direction throughout the session. The November USDA crop report will be out tomorrow am so there will be a lot of evening up today ahead of this report. The early call is 5-10 higher in wheat and beans, 4-6 better in corn. The weekly crop progress report this afternoon is expected to show roughly 35-40% of the corn crop harvested with beans roughly 70-80% complete.
Somar, the widely followed Brazilian weather forecaster, reports widespread, heavy weekend rain in Brazil, up to 1" in Mato Grasso, the largest bean growing state in the country. Up to 2 3/4" more rain is forecast this week in the northern part of the country with lighter amounts to the south, which had heavier weekend rain than the north. Overall, conditions in Brazil remain very favorable. Weekend rain was seen in Argentina but amounts were not as heavy nor widespread as in Brazil. A mostly dry week is forecast with significant rain not expected again until early next week.
The southwest US winter wheat belt was mostly dry over the weekend and more of the same is predicted this week, allowing farmers to finish up winter wheat planting. The midwest was mostly dry this weekend and more of the same is forecast until late this week. Scattered rain is forecast Fri-Sat in the west, Saturday in the east. The 6-10 day calls for below normal rain, which should allow for continued rapid harvest progress.
Lower start expected despite overnights
A mixed start is indicated by overnight trading but there is a widespread expectation that when the opening bell rings we will be lower: since the grains closed their overnight session earlier this am, the $ has rallied while crude oil and equities have sold off, which will encourage selling in the grains this am. Two of the three important market movers are bearish this am: the weather and the $. The third critical componet, the funds, are unlikely to be big, aggressive buyers this am and they could very well continue as sellers today, as was the case yesterday. Thus, is appears likely we will start and stay lower today, barring a change in the direction of the $, a change to wet weather in the updated forecast later this am, or big fund buying.
The USDA just announced China bought 356,000 tonnes of US beans for the 2009-10 crop year, which started Sep 1. There had been talk since late yesterday afternoon that there would be a Chinese bean purchase announced this am but only a couple of cargoes, roughly 110-115,000 tonnes. This larger than expected sale should help limit losses in beans this am, although I still expect them to be lower.
Favorable weather is forecast to continue in both Argentina and Brazil the next several days or longer. The US Midwest will stay dry the next 5-7 days or longer, allowing rapid harvest progress in corn and beans as well as late soft red winter wheat planting, although it is too late in the season in much of the Midwest to plant the crop now. The delta will stay dry until Monday, when some renewed rain is forecast, delaying late bean harvesting again. The southwest should continue to enjoy favorable late season winter wheat planting weather.
Weather, funds, $ influencing grains
A generally lower start is likely this am, 2-4 wheat, steady/easier corn and 5 lower beans. The $ is a little lower currently but not enough to provide much support to the grains. Gold is higher again this am but crude oil is a little lower, also not enough to influence the grains much.
FC Stone estimated the corn crop at 13.004 billion bushels with a yield of 164 bushels per acre (bpa). Their bean guess was 3.379 billion with a 44.1 bpa. Last month, the USDA was 13.018 billion corn with a 164.2 bpa and 3.250 billion beans with a 42.4 bpa. The next USDA estimate will be Nov 10.
Conab, a division of the Brazilian Agriculture Dep't, raised their bean production guess slightly, to 63.05 million tonnes vs 62.8 million last month. Last year, Brazil harvested 57.1 million tonnes of beans. Conab left their corn guess unchanged from last month at 50.9 million tonnes. They lowered their wheat guess to 5.04 million tonnes from 5.25 million previously.
Weekly export sales this am good for corn at 564,000 tonnes and in line for beans at 522,000 tonnes. The rest were slow with 284,000 tonnes of wheat, 117,000 tonnes of meal and 7000 tonnes of oil.
The three main influences on the market currently are the weather, which remains bearish, the $, which is only slightly supportive for grain prices this am, and the funds, who helped push prices lower yesterday in corn and beans when they were net sellers on the day instead of buyers, as they had been the previous two days when corn and bean prices had rallied. Funds were small buyers of wheat yesterday, however, enabling this pit to post small closing gains.
Light Argentine rains are forecast tomorrow and Saturday, which will be welcome. Brazil will see rain sweep from south to north today through Sunday, slowing planting efforts but keeping overall conditions in good shape.
The US southwest winter wheat belt will be dry the next 5-7 days, allowing for late planting to finish up. The delta will stay dry through Sunday, allowing severely delayed bean harvesting to proceed. Rain early next week will slow this process down again then. The midwest will benefit from dry harvest weather the next 5-7 days and the 6-10 day predicts below normal rain, which should allow for even more favorable harvest weather.
Higher grains start despite bearish forecast
A higher start is indicated in all the grains this am, roughly 8-10 in wheat and beans, 5 in corn. This is despite the bearish weather forecast. The $ is lower while crude oil, gold (which spiked sharply higher yesterday) and equities are all higher, sending a strong bullish signal to the grains.
There were 220 bean deliveries this am, the first of the month. The delivery date was Oct 1 and no commercials stopped any of the beans.
Informa puts out its Nov crop estimates at 10:30am US Central time today, followed by FC Stone late this afternoon. Also, the Federal Reserve Board will announce any changes in its policy today at 1:15 pm, US Central time, when the grains close. This could impact grain prices tonight, depending on what the Fed says.
The funds were big, aggressive buyers again yesterday, mainly in corn and, to a lesser extent beans, but they ignored wheat, causing this market to lag well behind the big gains in corn and beans. It is said the funds spread big trades over a three-day period. I don't know if this is true or not but if it is today would be the third day so some traders think we will see large scale fund buying again today.
Deutsche Bank started moving their long Dec 2009 corn position into Dec 2010 yesterday at the close with three large trading houses doing about 7000 contracts of this spread. More of the same is expected late in the session the next 4 days. This put some late pressure on Dec 09 and lent late support to Dec 10 corn. Goldman Sachs will start moving their long positions forward starting Friday.
Brazil will see renewed rain in their bean belt Thur-Sun. Despite excessive rain last month, Brazilian bean planting is well ahead of normal for this time of year.
The US southwest winter wheat belt will stay dry the rest of this week into the weekend, allowing for late planting of the crop. The delta will stay dry through Sunday, helping farmers harvest beans until rain returns early next week. The midwest will stay dry the next 6-7 days, which will be welcome for corn and bean harvest efforts. The 6-10 day appears drier this am than was the case yesterday am, which is welcome.
Correction in the grains likely
A lower start is expected this am, 7-10 wheat and 4-5 corn and beans. It is widely thought yesterday's late fund driven rally was overdone and a correction is likely this am, which contributed to overnight selling. The $ is higher while crude oil and equities are lower this am, a bearish combination for all the grains. We are set up for a "turn-a-round Tuesday" type trade where the market reverses course from Monday.
Funds were estimated buyers yesterday of 5-6000 each in wheat and beans, 12-15,000 corn with much of this coming late in the session. There were no bean deliveries again this am.
Yesterday afternoon's Weekly Crop Progress report showed corn harvesting in line with trade ideas at 25% done, but beans were less than expected at 51%. Both crops are well behind normal in harvest progress, 71% average for corn, 87% for beans. Winter wheat planting reached 79% vs 90% average with emergence 64% vs 75% average.
FC Stone will put out their Nov crop guesses tomorrow afternoon with Informa expected either Thursday or Friday morning.
Hot and dry weather is forecast for most of the Brazilian grain areas the next few days, followed by rain late this week into the weekend. Argentina will see welcome rain the next 5 days or more except in the southwest wheat belt, which is expected to remain largely dry.
The US delta will stay dry the next week or so, allowing for bean harvesting to proceed. Rain will follow this dry period, however, delaying any late harvesting. The southwest winter wheat belt will benefit from dry conditions today-Saturday, allowing for late wheat planting, with scattered rain expected Sun-Mon. The Midwest will continue mostly dry the next 6 days or so, allowing rapid corn and bean harvesting. Rain chances increase after that, especially in the west with the 6-10 day now calling for above normal rain there along with below normal rain in the east.
Grain traders focused on weather, lower dollar
A mixed but mostly better start is expected this am, down 1 in wheat, up 1 in corn and 6-8 higher in beans. The $ is a little lower while crude oil is higher, a slightly supportive combination for the grains. There were no bean deliveries again this am. The lack of fresh market moving news this am will probably keep traders attention focused on the $ and the weather.
The weather appears very bearish with dry conditions across most of the Midwest, delta and southwest over the weekend and more of the same forecast today through Saturday. This will speed up corn and bean harvesting and advance winter wheat planting. However, this bearish weather picture was discounted by the big sell off in the grains last week so it is already at least partly in the market.
More dry weather is forecast for Brazilian grain areas the next several days but rain is forecast later this week into the weekend. This dry weather break will be welcome after too much rain last month in some parts of the belt. Argentina will see welcome rain today after several days of hot weather.
All the main US growing areas, the southwest, Delta and Midwest, had mostly dry weather over the weekend with more of the same predicted all this week. This will be beneficial for winter wheat planting as well as corn and bean harvesting. The 6-10 day forecast calls for above normal rain in the western Midwest and eastern part of the southwest, below normal rain in the eastern Midwest and western part of the southwest.
|
|
|
|
|
|
