Written by Chris Robinson
Corn: September corn settled down ½ cent at $3.58. New crop CZ settled up ¾ at $3.69 ¾. Corn posted its early this morning during the electronic session, trended lower for the first hour of pit trade and then rebounded through the afternoon in rather uneventful price action, moving through just a 7 cent trading range. Funds sold 2000 contracts after starting the day with an estimated long position of 74,000 contracts. Technically, CZ has resistance above at $3.75 and then $3.77 ¾. Below, Tuesday’s new contract and 4 year low at $3.58 holds for now. If history is a teacher, round numbers are big psychological targets, so a lot of bears have their gun turrets poised at $3.50. The bulls, on the other hand, continue gaze longingly above at their target of $4.00 which we have not seen since July 10th. Export sales will be released tomorrow. The trade is expecting old crop sales of 100-200 tmt along with 500-700 tmt of new crop. Last week we saw 120.9K and 758.7K, respectively.
Wheat: September wheat settled down 10 cents at $5.28. Wheat posted its high on the opening bell at 8:30 AM and then pulled a Houdini, sliding almost 20 cents a bushel from that high. The low at $5.27 ¼ is just 9 cents removed from the contract and 4-year low posted on July 29th down at $5.18 ½. After an impressive 53 ½ cent rally, the contract has retraced almost all of those gains. Technically, a settlement below $5.18 opens the door for another leg down, most likely to at least the $5.00 level. The funds sold 2,000 contracts after beginning the day net short 74,000 contracts. Russian wheat yields are estimated to be closer to 61-63 MMT’s. This was 2-4 MMT higher than the USDA. The lone bull story, of the quality issues of French wheat fades every time the FSU increases its crop estimate. Tomorrow’s export sales are expected to be 450-650 tmt.
Soybeans: September soybeans settled down 14 ¾ cents at $10.79 ½. November new crop settled down 12 ¾ cents at $10.46 ¾. The soybeans posted the high early in the overnight session at $11.02 but when the 8:30 AM bell rang, the beans headed south, breaking 20 cents in the first 2 hours. The best the bulls could do was a 5 cent rally, and then the sell orders came on line again. The funds sold 4,000 contracts after starting the day net short an estimated 21,000 contracts. Exports are expected 0-100 tmt for old crop and 850-1,050 tmt for new crop. Last week saw 94.9 tmt and 1,086.6 tmt, respectively. Technically, a settlement below 10.43 ¾ (yesterday’s contract and 4-year low) opens up the door to bears targeting the $10.00 print.
Typically it takes a few days for the market to digest a USDA report/information dump. I think I read a half a dozen stories today from “experts” saying that this is the start of broad based “commodity deflation”. With the recent sell off in the meats leading us down, combining with the 4 year lows for grain prices, the national media is just starting to get interested in this “story”. Our advice remains unchanged. Manage your business risk with hedges so you are not swinging in the wind with every gyration in the flat cash price and every doom and gloom story reported in the national media.
CER