Trading this week was about as expected ahead of the Thursday 7:30 AM central time USDA monthly crop report. Without perception of the report being feared extremely bearish or bullish but more neutral were seeing position squaring and evening up. Monday saw grains down hard on the day followed by short held positions buying out with Tuesday up much higher in early trade before long-held positions sold out. These two days allowed for traders to offset risk ahead of the report's release.
Here's how the industry polled pre-report estimates came in. Corn productions average estimate is 10.598 billion bushels versus 10.727 on last month’s USDA estimate, down 129 million bushels. The range of estimates are, 9.954 to 11.194. Any number around the average estimate, we open higher but close lower. So if the average estimate is met wait for a light rally then go short. Any surprises stand aside. Near the low end of estimates and we push limit up $.40. At the high-end limit down could be pushed. If there's going to be a surprise here it will come as a bearish surprise. Though the September crop condition numbers were up only 1% in the good to excellent condition. There was more than ample farmer talk yields were better than they thought. The key here is what did they think. Ending stocks are pegged at 645 million bushels down from 733 last month. The range of estimates are 521 to 815. This lower estimate may be offset by our very low demand for corn the last two months.
Bean production is estimated at 2.770 billion bushels versus last month's USDA estimates of 2.634 or up 136 million bushels. The range goes from 2.600 to 2.903. The higher estimate comes from a 5% increase in the good to excellent category on the crop condition reports for September and talk off higher-than-expected yields. Ending stocks numbers are guessed at 134 million bushels versus 115 last month. This higher number comes clearly from the increase production, but there could be a surprise here if the USDA sees our record demand offsetting it.
There's no wheat production as planting of our winter crop is underway but we do get ending stocks numbers. The pre-report estimate is 627 million bushels down 71 million bushels from last month. The range is 522 to 714. The average guess is a fairly good drop. But to have tight supplies you need to come in at 400 million bushels. Still, traders are looking for a sharp crop. If the corn and bean report numbers come in bearish with the crop's closing lower, we will continue the harvest break with potential of filling the chart gaps with December Corn at 6.75 and November Beans 14.85. Only demand surfacing next would prevent those prices from being hit.
After the close Tuesday our crop condition report came out. There are no more corn condition numbers as were now 69% harvest. Beans Came in at 37% in Good to Excellent condition up two percent from the week prior and their highest rating since 40% on July 9. Were still under a year ago of 56%. This will further talk of a higher bean production number. Harvest came in at 58% complete well ahead of the five year average of 40%. The winter wheat crop Is now 57% planted. We’re watching weather closely now in key producing states. Texas field conditions are 46% in very poor to poor condition. Oklahoma 74%, Nebraska 97%, Colorado 85% and number one wheat producing state Kansas 82% poor to very poor. Wheat is a dry land crop not in need of the kind of rains corn and beans need. But with problems in Australia, Europe and Russia and shrinking world stocks , the US Crop Is being watched by the World closely. If we don't get a supply-side problem rally, we could see a demand rally in time. Most US export competitors in the world market had or are having poor crops. Australia's crop looks down on other 4 m.m.t. from last month’s report. Russia’s drought has them backing away from the export markey. Their crop Is estimated at 40 m.m.t. under their 2010 crop of 41.5 a disaster that Led to them suspending exports. We’re hoping soon to become a primary port of the world for wheat exports. So far exports are neutral at best.
On market report day trading ranges are usually a product of emotions Inspired by the emotions, but here's how technicals read anyway. December corn support Is 7.05 then 6.75 with resistance 7.60, 7.85 then 8.00. November beans support Is 15.05 Then 14.85 with resistance 15.70 then 16.20. December wheat support Is 8.55 then 8.15 with resistance 8.80, 9.00 then 9.20.
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