Blogging by the Bushel
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Market Report

Monday October 9th, 2017

December 17 corn closed down ½ at $3.49 ½ and March 18 closed down ½ at $3.62 ¾. November beans closed down 5 ½ at $9.66 ¾ and January 18 closed down 5 ¾ at $9.77 ¼. December wheat closed down 7 ½ at $4.36 and July 18 closed down 6 ¾ at $4.83 ¾. Crude oil closed up $.28 at $49.93.

The corn market featured two-sided activity to start the week.  Sunday night featured an almost “hot” $.01-$.02 higher start, but ultimately could not sustain bullish momentum and finished sharply unchanged by the break. That is pretty much where the market ended up at days’ end, finishing fractionally lower in a four cent range. The funds were believed little changed by days’ end, implying they are short close to 175,000 combined futures and options. The focus this week will no doubt be on the USDA report this Thursday, as well as a harvest pace that continues to lag.  Note, due to Columbus Day, gov’t offices were closed, which delayed the weekly Crop Progress report to Tuesday afternoon. Given the focus on soy, we doubt if corn harvest expanded any more than 10%. Big rains in the heart of the Midwest over the weekend will keep combines parked at many farms. It will also be a wet start to the week for the Eastern Belt. The extreme far west fringe of the Corn Belt is expected to see its first real frost, ending the growing season roughly on time. Hurricane Nate roughed up the Gulf some, but left very little lasting impact on the commodity sector of the day.

The October crop report is due out this Thursday (10/12).  Though trade expectations are quite subdued heading in (weekly straddle trading 7 cents), the importance of the data cannot be understated. In this report, the USDA will have the most “real” field data at their disposal to date, which, for better or worse, will drive a stake through the heart of yield skeptics, or confirm their bullish suspicions. Wire service reports have been littered with private analysts racing to raise their prior projections to catch up with the USDA. The average trade estimate heading in will be a 14.2 BB crop, which is very close to the USDA’s September guess. Carryout is expected to be trimmed back slightly, likely mostly by virtue of the Quarterly Stocks’ 50 MB cut to carry-in stocks from 16/17.

The soybean market spent the session in a back and forth two-sided trade where the sellers won out in the end settling beans down near their session low. We continue to trade in the recent range for now roughly defined by $9.50 to the downside and $9.87 topside for November. Rallies are limited by large global supplies and US new crop harvest advancing while strong demand helps cushion the downside. The new input is the concern for Brazil’s crops where planting is being delayed by dry conditions in the center to north of the country. Dryness persists in the northern growing areas including the key state of Matto Grosso that is delaying planting and slowing germination what little is in the ground at this point. The late selling in beans and meal picked up in part because of the mid-day model run showed rains stretching north into Mato Grosso in the 8-10 day period.

It was a quiet news day, and with the path of least resistance lower, the wheat markets obliged with defensive price action throughout the session. Mpls may still be benefitting some from China being on the export sales report Thursday, finishing the strongest at only a few ticks lower. Do not really know what was behind the better start to the overnight, but selling surfaced as we neared the start of the European trade, and the markets never really recovered. As we look ahead to the rest of the week, Egypt is back in for wheat. They were just in last Monday, and it did seem to have supported prices some before the late week’s collapse. We also have a crop report Thursday morning, but the report is more of a corn and soybean report than wheat. Expect the wheat complex to be a follower. That being said, if the report does come out friendly, keep in mind both the HRW and SRW wheat contracts still have a lot of overhead to deal with following the Sept 29th crop report. We have already seen Chicago struggle on its most recent move to $4.50, and see no reason for that to change.

Anna Kaverman

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