Wednesday, September 3, 2014

Weekly Grains Analysis

By Ryan Ettner, Jim McCormick

The new crop beans tested both ends of last week’s range to begin the week. Initial weakness was seen on the overnight market while the strength came during the day session. Late in the session the new crop beans managed to take out last week’s highs (filling a gap on the chart) but were not able to close above them.

The September beans and meal contract continue to find strength on the tight old crop supplies. As harvest moves north we would look for the old crop cash market to weaken as more beans come available. I had a customer near Covington, Indiana report that harvest of some beans would begin in his area next week.

There continues to be talk of Sudden Death affecting some areas of the Midwest but we do not believe it is wide spread enough to have a major effect on the nations yield.

Friday’s commitment of traders report showed that the funds were short 21,940 contracts which was biggest short trade position since 2006. In 2006 they maxed their short position out with about 55,000 contracts. In China last night, their weekly auction of government stocks saw 132,135 tonnes of soybeans purchased out of the 337,539 offered. This would imply a 39% participation rate, above the 30% from the previous week. Weather continues to be viewed bearish as the warm wet forecast will allow for the bean plants to add pods and fill them out to the max.

The trade was anticipating crop ratings to stay stable tonight at 70% G/E. The five-year average for this date is only 55% of the crop being rated g/e. The actual ratings counter seasonally improved by 2 points and are now rated 72% g/e. Allendale continues to look for beans to fall to the $9.50 area when the fall low is scored and would recommend not chasing rallies and for producers to sell into a price rally if it were to occur. Allendale will release the results of our 25th annual crop survey tomorrow morning.

Corn (CBOT:CZ15

Corn saw a mainly calm trading range today. Coming back from the 3-day weekend the weather remained mainly the same with no cold threats to offer a bounce from. Given that the news remained mostly the same, corn traded in a range that was mostly the same as well. There were plenty of buyers today in the low 360s and there were just as many sellers in the high 360s. Corn was reported 74% good-to-excellent, up 1% from last week. Eventually news will be seen which breaks this market out of the recent small range but without a cold weather threat or Midwest yield reports this market remains mainly stuck on a grind sideways.


  • As long as yield estimates do not move higher than 173 there continues to be a reason for bulls to buy in the low 360′s
  • Larger support is expected the closer to contract lows this market moves
  • Keep an eye out for disappointing yields, low test weight talk and especially early frost fears to buy from
  • Bulls can also look for wheat support on days when Ukraine news is sending that market higher


  • No news at all remains beneficial for the bears as there are still slightly more sellers than buyers
  • Today’s forecast continues to suggest temps that remain slightly above average for most of the outlook
  • Don’t look to get too excited about upcoming yield reports to suddenly push corn lower unless numbers 173 or higher are seen.

Wheat (CBOT:WZ14)

Wheat finished lower today. The lack of new news out of Ukraine and Russia is pressuring the market. We continue to suggest this market is trading sideways and with this recent Russia Ukraine confrontation giving us reason to bounce, we would expect to continue this moving forward. Ratings for spring wheat came in at 63%, down 3% from last week.

Allendale is releasing their yield results tomorrow morning. We are expecting to see this be a market moving event and would expect to find support or selling pressure based on what the results are going to be. There has been some talk about quality concerns in the spring wheat growing areas which would suggest we could see the Minneapolis wheat gain some premium against the Chicago contract moving forward.

Funds are still actively short wheat and this would still suggest we could see some defending of their position until we break above the August highs. On a feed basis we could see corn harvest pressure the wheat market but would expect the spread between the two to widen. Continue to look for sideways to higher trade moving forward and we continue to struggle on higher moves as it doesn’t appear the Black Sea confrontation is giving the market enough reason to buy into new highs.

  • Export inspections were 773,041 tonnes above trade estimates of 425-675,000 tonnes
  • Egypt seeks 55-60,000 tonnes of US soft wheat
  • Ukraine’s grain exports jump to 5 million tonnes in July-August

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