A bit of an exhale on the European debt crisis with news of a plan that would attempt isolate the problems. Bernanke warns of weak US economy, but promises to support the economy if necessary. This tamped down flight-to-quality buys of bonds and precious metals. Some private jobs numbers out this week ahead of the US numbers Friday. The corn markets seems to have found some support from production concerns out of China and US acreage reductions.
Tag Archives: Corn
Favorable Vote out of Germany; Commodities May Get a Lift
At least in the early going there is a tamping down of the EU crisis with the favorable vote from the Germany. The trade may be thinking, however, that the damage has already been done. Markets may turn now to the US situation and the struggles the Debt Committee is having achieving its goals.
Physical commodities may get a slight lift today with a weaker Dollar and reduced uncertainty out of Europe. There doesn’t seem to be much conviction and a return to September lows is a possibility.
Corn: Still in Long Liquidation Mode as Bargain Hunters Looking at Wheat
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NEAR-TERM MARKET FUNDAMENTALS: With a strong correlation with the energy markets, reports of higher than expected yields from the field and massive fund trader long liquidation selling, the market remains in a steep downtrend. The market is in a short-term oversold condition but recent COT reports show a large net long position from funds and speculators and harvest-time prices are at a record high. China prices are also high into their harvest but even the extreme tightness outlook for this season does not seem to be enough to offset the long liquidation trend. Hedge funds are shifting out of agricultural markets and this has pressured markets across the board. Fears of global deflation and very slow or no growth due to economic actions in Europe and the US remains as a perceived threat and this has sparked the selling trend. Funds were active sellers for much of the session yesterday and continued to sell overnight to push the market to the lowest level since July 12th with December corn now down as much as $1.35 1/4 off of the August 29th peak. While there are still supply concerns, traders believe the corn market was “pricing in” a steady global growth theme for commodity markets but after the Fed actions this week and European and China growth numbers yesterday, traders are seeing more of a global deflation theme to commodity markets. Supply fears have moved to the sidelines with a focus of attention on demand concerns and on shifting flow of capital as traders see commodity markets as a risky investment. Weekly export sales came in at 598,100 metric tonnes which was in line with trade expectations. As of September 15th, cumulative corn sales stand at 35.9% of the USDA forecast for 2011/2012 (current) marketing year versus a 5 year average of 26.8%. Sales of 535,000 metric tonnes are needed each week to reach the USDA forecast. News of strong demand long term from China and news from a weather firm of another adjustment lower in US corn yield this season failed to provide much support. The International Grain Council cut their forecast for global corn production by 4 million tonnes to 845 million tonnes. South Korea bought 55,000 tonnes of US corn overnight. China feedgrain officials believe the country may have a short-fall of near 15 million tonnes per year by 2015 as the country sees increased needs due to expanding meat and egg production.
TODAY’S GUIDANCE: Global economic slowdown fears are accelerating and while China corn demand may be stronger than expected for the coming year, fund traders are in a long liquidation mode and selling could intensify ahead of the stocks report at the end of the month. Higher yield talk and a surging dollar are other bearish forces. While the October 12th report could be quite bullish, investors are stepping to the sidelines now.
TODAY’S MARKET IDEAS: December corn resistance is at 666 1/2 and 677 1/4, with 634 1/2 as next support.
Bit of a Negative Bias in Equities as We Close the Week
Little bit of a setback in equities with the positive buzz out of the Euro-Zone wearing off. Consumer Sentiment numbers will be important today. Gold and Silver are on the ropes as of late but have been rejecting the early morning moves so far. Grains are recovering a bit with an overly negative bias over the past week. Reports of derivative trading causing the recent slide in grains has surfaced.
Generally Weak Tone To Start the Week
More news about possible Greek default. USDA Supply & Demand Report this morning will set the tone for the rest of the week.
Corn: USDA Sets the Tone
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NEAR-TERM MARKET FUNDAMENTALS: The USDA reports will set the tone for the session today with traders looking for US production near 12.505 billion bushels, down near 410 million bushels from last month and compared with 12.447 billion last year. Traders see yield just under 149 bushels per acre. Old crop ending stocks are expected to be adjusted higher by about 35 million bushels from 940 million last month. New crop ending stocks are expected to fall to near 636 million bushels from 714 million last month. December corn closed 2 1/2 cents higher on the session Friday but down 23 1/2 cents for the week. Weakness in outside market forces helped to limit the buying support. A move to the highest level since mid-March for the US dollar added to the negative tone. Better than expected export news plus some talk of frost possibilities for the northern Midwest for late this week helped to support. Weekly export sales came in at 820,600 metric tonnes for the current marketing year and 50,000 for the next marketing year for a total of 870,600 which was near expectations. As of September 1st, cumulative corn sales stand at 29.9% of the USDA forecast for 2011/2012 (current) marketing year versus a 5 year average of 23.3%. Sales of 596,000 metric tonnes are needed each week to reach the USDA forecast. In addition, private exporters reported a sale of 127,506 tonnes of US corn to unknown destination. Traders are concerned that usage is already being rationed with recent high prices as corn values remain well above wheat. The Commitments of Traders reports as of September 6th showed Non-Commercial traders were net long 353,708 contracts, an increase of just 385 contracts for the week. Commodity Index traders held a net long position of 365,135 contracts, up 264 for the week.
TODAY’S GUIDANCE: On supportive news, a move through resistance at 752 1/2 should be enough to assume a resumption of the uptrend with 799 as next objective. On bearish news, 701 1/4 and 677 1/4 become key support levels.
Gold Under Pressure; Crude Showing Strength; Corn & Soybean Conditions Worsen
Mixed bag this morning. Gold under pressure and Crude and Copper showing some strength. With stocks up and US Dollar weaker give the impression that sentiment on the economy is becoming more stable. Corn and Soybean crop conditions continue to worsen which should provide some under-pin to the market.
FOMC Minutes Show Fed May Provide Further Easing
Private job estimates over night come in a little under expectations and modestly below last month’s Payroll numbers. Rumors that the Fed will be there to provide easing if necessary, but there does seem to be some divided opinions in the FOMC. However, there are members who are willing to do some more innovative things to help the economy. US grain crops are still a concern with both corn and soybean yields coming more in question. Gold and Silver have priced in some significant uncertainty, but we do not think the news will be there to support.
CORN: Demand Remains Weak but Yield Forecasts Continue Decline
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December corn is up as much as 10.3% in just seven trading sessions with the surge higher to new contract highs overnight. This marks 6 of 7 days of new contract highs. Supply issues continue to support the uptrend and fund traders have returned as active buyers. Open interest inched up to the highest level since June. In the annual Pro Farmer crop tour, the average corn yield estimate came in at just 147.9 bu/acre as compared with the USDA estimate from the August report at 153. If we plug in this yield estimate and leave all the other numbers unchanged, ending stocks come in at just 238 million bushels with a stocks/usage of 2.1%; both record lows. Keep in mind; this does not have any adjustments in harvested acres and many traders believe there will be losses of 400,000 to up to 1 million acres lost to flooding on key rivers and too much rain into planting season. The Commitments of Traders reports as of August 23rd showed Non-Commercial traders were net long 317,415 contracts, an increase of 6,161 contracts for the week. Commodity Index traders held a net long position of 351,218 contracts, up 4,696 for the week. The buying trend of the funds is seen as a short-term positive force. December corn closed sharply higher on the session Friday with fund traders noted as aggressive buyers. Fears of declining yield and some better export news helped support the run higher and weakness in the US dollar also was supportive. Private exporters reported a sale of 365,760 tonnes of US corn to unknown destination. Of the total, 234,840 tonnes are for the 2011/12 season and the rest for the 2012/13 season. Traders are expecting another decline in crop conditions ratings of 1-2% for this afternoon’s update from 57% posted last week. This would suggest 55-56% rated good to excellent as compared with 62% on July 31st which is about the time of the USDA crop production survey. Global economic concerns persist but the positive reaction for equity markets after the Fed Reserve Chairman speech Friday helped support.
TODAY’S GUIDANCE: Demand news remains weak but yield forecast continue to decline. There are still plenty of supply issues which might support. Traders will be watching the denting numbers for the weekly update this afternoon as there are increased concerns that the crop will mature and close the growing season quicker than normal due to July heat. The market typically does not “wait and review” so we would believe the market is still in a position to remain in a steady uptrend ahead as the rationing process is more difficult with declining yield.
TODAY’S MARKET IDEAS: December corn support comes in at 766 and 761 3/4, with 799 and 820 as next targets. Don’t rule out an eventual move to 868 for nearby futures.
USDA Grain Stocks Review – 2011.09.30
by Terry Roggensack on September 30, 2011
Below is The Hightower Report’s summary of the most recent USDA Quarterly Grain Stocks report. This report is available with your subscription to our Daily Commentary. Sign up for a Free Trail.
Full Report: USDA Quarterly Grains Stocks Review – 2011.09.31
CORN
The USDA report this morning was considered bearish with the market called to open down 15-20 cents lower. September 1st corn stocks were pegged at 1.128 billion bushels, which was 164 million bushels above trade expectations and outside of the wide range of estimates.
PRICE OUTLOOK: A resumption of the downtrend for December corn leaves 616 and 603 1/4 as next support levels.
The USDA reports this morning were considered slightly supportive for the soybean market but a bearish number for corn has caused an opening call of 15-20 cents lower. The USDA pegged September 1st stocks at 214.7 million bushels which was about 10 million bushels below trade expectations. This is the beginning stocks for the 2011/12 season and will tighten the outlook somewhat for the coming season; depending on the October 12th production update.
PRICE OUTLOOK: A resumption of the recent downtrend due to bearish news for the corn market leaves 1187 as next downside target for November soybeans.
The USDA wheat production report this morning was considered positive to the wheat market but this was more than offset by bearish news for wheat stocks and corn stocks and the market is called 5-10 cents lower on the opening. Traders were looking for spring wheat production near 493 million bushels but the report came in at 462.5 million bushels which is supportive. As a result, all wheat production is pegged at 2.008 billion bushels which is 36 million below trade expectations and down from 2.077 billion as the last USDA estimate. However, September 1st stocks came in at 2.15 billion bushels which was 115 million bushels above trade expectations. The report suggests that wheat feeding was not as high as expected.
PRICE OUTLOOK: A resumption of the recent downtrend leaves 606 3/4 as next target for December wheat.