Fridays USDA monthly crop report came out in line with pre-report trade estimates. There was no shocking surprise to push prices up the daily trading limits. This left grains either up or down marginally on the day after opening price high volatility was over. December corn settled down 13 while November beans were up 11 cents. In the big picture the report numbers for corn and beans are long term bullish as they suggest we will head into next year with tighter ending stocks than the two previous years. But the recent sharp price rally in July, priced in what the average price thoughts were leaving profit taking easy for the traders. As the old saying goes, buy the rumor sell the fact. Monday saw follow through selling with both corn and beans sharply lower. A quick review of the report showed corn production estimated at 10,779 billion bushes down 2.191 from the month prior report but only 150 million bushels under the pre-report estimate of traders polled. Soybeans production estimate was 2.692 billion bushels down 358 million bushels from last month and 104 million bushels under the average estimate. Ending stocks inventories represent the long term bullish psychology left from the report for the next year as they leave little room for export or domestic usage expansion. Corn ending stocks for the new 2012-2013 crop season came in at 650 million bushels versus last month report of 1.183 billion bushels and pre report estimates of 629 million bushes. Beans ending stocks came in at 115 million bushels versus 130 last month and almost equal the pre- report average of 114. Had all these numbers not been so bullish from a historical production perspective, we would have not opened higher but lower as they mirrored the trade expectation. Mondays crop condition report put the current corn condition estimate at 23% of the crop in good to excellent condition, unchanged on the week but well under a year ago of 60%. 10% of our crop if fully mature. I believe that the trade sees the corn crop as done growing even though conditions can still change on future Monday reports but only very small changes expected. Beans saw 83% of the crop setting the pod versus the five year average of 70%. That leaves 17% of the crop yet to fall prey weathers effect. The condition came in at 30% good to excellent up 1% from the week prior and under a year ago of 61%. The better rains forecasted this week by many of the followed forecasters, looks to have next week's report show improvement as well. But with only the tail end of the crop left to fill the pod and the room for improvement to be small compared to the year to year overall crop condition decline, traders see the bean crop growing season as largely over. Traders mainly await and debate what final production numbers will be. Now that the key yield development time is over for corn and ending for beans, weather and its effect on corn and beans becomes less a pricing factor and we move more to a demand driven market. We look to the Thursday weekly export sales report for direction on demand. Recent reports showed cancellations of previous purchases for new crop year shipment. Should this continue it would further the prospects of lower prices in futures near team. Last week I talked about buying into the crop report but taking profits on a report day rally and going short . I noted that after the report strength was priced in we would then face four negative factors . One, we would not have another USDA monthly supply side report for 30 days. Two, corns growing season is over. Three, beans growing season is ending. Ending weathers bullish pricing influence. Four, demand appears to be subsiding. Nothings carved in stone, but unless something bullish enters we still are looking at a possible larger correction. Seasonaly the timing is good for a post growing season , pre-harvest break. I look at technical for guidance now. December corn resistance is 8.25, a close over sets us up to make new contract highs. Support is 7.75 then 7.55. A close under 7.55 and 6.90 is next. November beans find upward resistance at 16.50. A close over and 17.00 is next. Support is 15.90 then 15.50 . A close under 15.50 sets up 14.90 as next stop. December wheat resistance is 9.25
and support 8.50. A close under 8.50 leaves 8.20 next support. Those who look to open an account using me as your broker call at 312-470 1112 ext=304 or send an e-mail to timothy.hannagan@alpari-us.com