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Today’s Prices
Grain markets finished lower today following through on yesterday’s bearish USDA report for corn and beans.
Grain Market News
U.S. Corn Monthly Ending Stocks
Old crop stocks of corn where raised a little in the Aug crop report, further in Sept and raised again in Oct. When we look at new crop stocks there was a big increase in Sept and a further increase in oct. Again, its not that stocks have just increased but have increased well beyond what the trade was expecting. It is worth noting that old crop stocks still ended up being very tight as of Aug 30th last summer and new crop stocks are still projected to be quite tight but just not as tight as they were being reported in the Aug crop report.
U.S. Corn Ending Stocks
Corn stocks are expected to increase to 1.5 bb. That is certainly a negative number but we are nowhere near the stocks we were at the previous 5-6 years and this will likely allow to any pullbacks in corn below $5 to be very brief as we move through the winter and into the spring planting season.
U.S. Soybean Monthly Ending Stocks
A similar situation for soybean stocks and USDA’s monthly estimate. Stocks increased in Aug, again in Sept, and then a big increase in Oct when USDA found 81 mb from a crop raised over a year ago. New crop stocks also saw a small increase in Sept but a big increase in Oct. Much of that due to the much larger ending stocks last year which are the new crop beginning stocks. Ending stocks are still relatively tight at 256 mb and new crop stocks at 320 mb are still relatively tight as well. The difference is this year stocks are increasing while last year stocks were decreasing.
U.S. Soybean Ending Stocks
Looking at ending stocks over the Past 18 years you can see stocks are expected to increase to 320 mb but still well below where we were at the previous 3 years.
U.S. Wheat Monthly Ending Stocks
Old crop wheat stocks finished at 845 mb. That is stable because last year’s stocks were known as of the June crop report. It’s new crop stocks that is important for wheat going into the new crop position. They have been consistently dropping all summer and getting extremely tight, projected now at just 580 mb. That is well below anything we’ve seen over the past 7 years.
U.S. Wheat Ending Stocks
The 580 mb would be projected is the lowest number going back to 2008 so certainly, wheat is the most supportive based on the supply and demand numbers USDA issued yesterday.
U.S. Grain Stocks
Although corn and beans were bearish in yesterday’s report, wheat was bullish. When we look at our grain stocks for corn, beans, and wheat combined, our stocks projected at the end of this marketing year are just a little higher than they were last year. Because corn stocks are a little higher, bean stocks are a little, but wheat is quite a bit lower so we’re still looking at total grain stocks that are relatively tight compared to the past 5-6 years.
Grain Market News
U.S. Corn Crop Condition
We’re not convinced the corn and bean crops are going to drop dramatically. We wouldn’t be surprised to see them relatively stable as far as the yield projection going forward. In the weekly update from USDA, crop conditions improved by 1% to 60% G/E. That compares to 61% last year. Overall, conditions have been stable to increasing just a little bit late in the season indicating the strong yields in the western belt.
U.S. Soybean Crop Condition
Similar situation for soybeans where crop conditions have been steady to slightly higher late in the season. Again, the 1% increase in the U.S. soybean crop condition likely a result of crops coming in a little bit better than expected in the western belt.
U.S. Corn Harvest
Corn harvest 41% complete as of Sunday. That is very close to last year but is well ahead the 13 year average which is 24%. Keep in mind, the U.S. corn crop went in the ground early this past year and there has been no major delays during harvest.
U.S. Soybean Harvest
Soybean harvest has advanced at 49% complete. That is below last year’s pace but above the 13 year average of 40%. Similar situation where beans got planted on time in the spring in almost all locations and we have not had any major delays. Overall harvest looks mostly favorable going forward. We’re going to see some delays this week as rains move across the belt but next week looks mostly warm and dry across almost the entire U.S. corn and bean belt. Harvest should really race ahead next week.
Wind Path
The only real weather issue is wind. We have deep low-pressure system on the ND/SD border creating very strong winds around that low-pressure system. Sustain winds over 30 mph out of the north and northeast in ND, out of the west in southern SD and NE. On the right side is the NWS active alerts. The light tan is wind advisories with the darker browns high wind warnings in western NE and western SD. There are wind gusts of 40-50 mph in some of these tan areas and that could cause some issue for corn and at this time that is the only significant weather threat at this time.
December Corn Chart
Corn prices seeing follow through on a sharp down move today. Today’s low at $5.06, very negative on the chart. The only good news is that markets did close at $5.12, 6 cents off the low and we’re approaching some fairly significant chart support in the lower $5 range. Unfortunately, technical indicators have not gotten into the oversold area yet so there is still more room on both the chart and technicals for a little bit lower prices. But we are approaching the peak of harvest and seasonal lows are probably close at hand.
November Soybean Chart
Soybean prices are in a downtrend. They’ve been in a downtrend off the early summer highs. Today we made a new low down to $11.84. That matches the lows set late March/early April. The good news on the chart is that we are at an area of significant chart support and today’s close at $11.95 was 11 cents off the daily low. The other thing that is important to note is that technical indicators are extremely oversold. Rarely do you see technical indicators this oversold, and it may be signaling that the market is overdoing it to the downside at least in the short term.
December KC Wheat Chart
Wheat prices have pushed down towards major chart support. We’ve come down to an area where our 10 and 40-day moving averages are all coming into play. We’ve been talking about this point on the chart for about the last two weeks and now that we’re down there we don’t want to get overly bearish. Certainly, the chart is pointed downward with corn and beans promoting some of that down move. Technicals indicators are pointed downward as well but with bullish fundamentals we do not what to get bearish with prices back down towards chart support.
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