Thursdays weekly export sales report, which is our primary weekly report on export sales and demand , came out much the same as we have seen the last six weeks, weak corn and wheat demand but friendly beans. Wheat exports remained weaker than the trade has been expecting. Exports were 488,000 thousand metric tons, up 28% from the week prior, but well under the 800,000 metric tons plus needed to be bullish. There were no big world buyers for high-quality wheat on the list. Buyers were smaller countries probably buying feed quality wheat not suitable for milling purposes which is always smaller purchases. Unless the world buyers looking for milling wheat high enough in protein for human consumption enter the market, we can't expect weekly sales to rise to levels that would be price bullish for future. That could change the next 60 days if Australia, a major world producer exporter, stays dry and Russia ends wheat exports in October as talk around the market has them to do.
Corn exports were 69,000 metric tons versus 214 last week and 1.127 million metric tons a year ago. The average weekly export sales for September 2011 last year were 797,000 tons weekly. This years average the first three weeks is 137,000 metric tons.
Consider this for future trading into next month. Last year corn fell 2 dollars on harvested profit taking in September, and that led to average October weekly export sales of 1.161 million metric tons as demand soared. After hitting a historic high 8.49, we have now fallen a dollar as harvest is underway. Should we drop another dollar, we could expect a surge in exports as value enters with harvest availability.
Bean exports were good again at 712,000 metric tons versus the three prior weeks of 628, 5.20 and 731. China was in for 237,000 metric tons versus 340 the week prior.
Until the South America crops come in next February, the US remains the sole port of origin in the world to buy beans from. Beans are now about $1.80 off their highs and like corn could see improved exports when we finish this seasonal correction. With the growing season over and harvest underway, we continue to look for our seasonal post growing season, harvest pressure correction to continue. It's hard for speculators to think being bearish as speculators are never more bullish as they are after hitting contract highs such as we did recently. That's because the bullish fundamentals remain present and will remain bullish until the next crop comes in. The last four years saw strong summer weather premium rallies into the summer growing season, followed by a harvest correction then a post harvest rally into late fall as grain end users scrambled to get grain for inventory.
Index and trend following funds are in large behind this seasonal trading pattern. For example, last year in September, using the March 2012 corn contract as an example, dropped from the years high September 1 of 7.94 to 5.94 October 3. Then rally to 6.84 on November 16. A two dollar correction due to harvest pressure then crop availability and value led to a 1 dollar cash demand rally. For beans, last September, using the
March 2012 contract, saw a September 1 high of 14.75 and break to 11.85 October 5, then rally to 12.90 October 17. A three dollar harvest break and a $1.05 end user buying rally.
Technicals read like this. December corn support is 7.45 as we enter today Friday. A close under and 7.05 is next with resistance at 7.75. A close under 7.05 and 6.75 is next and that could be our harvest correction low. Bean support bases November futures is 16.20 entering Friday. A close under and 15.90 as next support then a very strong support at 15.50. Worst-case scenario on a harvest break would be 14.80. December wheat support is 8.55 then 8.15. Resistance 9.20.
Note, even though this seasonal price correction looms over the market, any new bullish news that enters will give us a sharp daily rally as underlying fundamentals remain historically bullish, so markets will be very sensitive to anything friendly to the market.
These grain reports are now posted on the Alpari website and for those interested in going back and reading older issues, they are archived. If you're not yet a customer here at Alpari and interested in trading futures and using me as your broker call 312-470-1112 extension 304 or e-mail me your request.
The article is provided by Alpari