Article Text: September 11, 2015 Written by Chris Robinson Corn: December Corn settled up 12 ¾ at $3.87 which is the highest settlement since August 10th. Corn moved lower early in anticipation of the 11AM USDA report trading to a day session low of $3.64 ½. Two hours and 20 cents later, the bulls were in charge. For the week, CZ gained 24 ½ cents. Managed funds had entered the day long 70K contracts. 2015/2016 carry was pegged at 1.592 vs. August’s 1.713. This was less than the average analyst guess at 1.609. Old crop carry was pegged at 1.732 billion bushels, down 40 million bushels from August’s 1.772 billion bushels. 2015 crop production was pegged at 13.585 billion bushels. The average analyst guess had been 13.484, vs. August’s 13.686 billion bushels. The yield was pegged at 167.5 down 1.3 bushel/acre from August’s 168.8. The average analyst guess had been even more bullish, at 166.5. Finally, worldwide carry for 2015/2016 was pegged at 189.69 mmt, down 5.4 mmt. This drop in worldwide carry reflects lower production from the Ukraine and FSU. Bottom line? The drop in yield was enough to feed the bull. Funds added to their length, and are now the corn producer’s knight in shining armor. Resistance above comes at $3.94 ¾, $4.06 and then $4.17 ½. Wheat: December Chicago wheat settled up 7 cents at $4.85. Wheat trended lower with the corn through the morning, finding its low at $4.68 ½ before catching a bid courtesy of the good bounce in corn. For the week, WZ gained 17 ¼ cents. The USDA raised US Wheat carryout to 875 million bushels, up 25 million bushels from August’s estimate. This can hardly be described as bullish fundamentally. They also raised worldwide carry out to 226.56 MMT, which was 5.09 MMT more than August’s 221.47 MMT. India’s crop grew, as did Canada’s. Combined with the US crop gains, they combined to compensate for the drop in production from China, Australia, Russian and the Ukraine. The funds came in short 30K Chicago wheat. Next week’s commitment of trader’s report will clarify how much of today’s bounce was fueled, if any from short covering. Soybeans: November soybeans settled up ¼ cent at $8.74 ¼. For the week, SX gained just 7 ¾ cents. The contract trended lower through the morning, spiked sharply lower to a new contract low on the 11AM release, and then fought its way back through the rest of the day. The auto-bot, high frequency traders slammed the initial USDA figures. 2015/2016 new crop carryout was lowered 20 million bushels to 450 million bushels from August’s 470 million bushels. At 450, however, it was still 19 million bushels more than the average analyst guess. Old crop carry dropped 30 million bushels to 210 million from August’s 240 million. 2015 crop production was pegged at 3.935 billion bushels. This was 19 million higher than August’s 3.916 billion bushels. More importantly, it was 94 million bushels higher than the average analyst guess at 3.841 billion. They tweaked acres slightly 83.5 vs August’s 83.549. The yield they raised .2 bushels an acre from 46.9 to 47.1. The trade had been looking for a drop in yield, with the average analyst guess at 46.1. Again, this was 1.1 bushel/acre higher than the average analyst guess, and helped fuel the spike lower to post a new contract low at $8.53 ¼. This took out the old contract low at $8.55 by 1 ¾ cents. The beans then reversed and ran any weak shorts out of the market with a nice 20 cent rally through the rest of the day. This was certainly a nice recovery from a dismal beginning. We will have to watch next week to see if the funds adjusted their positions. They came in short 25K contracts. Was today’s performance enough to get them to flip and get long? The USDA spoke today. The auto-bot traders gave us another dose of volatility, slamming prices early, only to run every weak bear out of the market going home for the weekend. Bottom line: The drop in corn yield was enough for the funds to “put the spurs to ’em” and goose us up to 1-month highs in corn. They also gave us good rallies off of new contract lows in soybeans. The action in wheat was the weakest, but so was the USDA info regarding wheat. That cheering noise out there is the corn producers applauding the managed funds that came in long and added to their longs today. Only time will tell if they can give us the rocket fuel we need to get prices at or above $4.00/bushel corn. Make sure you have your bases covered with the right mix of put options for unpriced grain as well as the equally important call options for the bushels you already sold. The hallmark of our approach has not changed even as we have been sitting at our lowest grain prices since 2010. As always, our clients have floors in place for unpriced bushels, with the upside COMPLETELY OPEN. Finally, a short note regarding September 11th. I hope you all were able to take a moment and recall that day and those we lost. I would hope that in some way, shape or form you paused to remember. It’s also a good time to remember that the USA, with all its detractors and critics both at home and abroad, is still the shining light of freedom in a world plagued with pockets of evil. Have a great and safe weekend. CER
