Corn and beans opened Sunday night flat to several cents higher as traders waited to see if any buying would enter on talk about Frost entering the Midwest Sunday night into Monday. But with crops too far ahead in the growing season to be damaged traders began selling, pushing corn and beans to new lows on the month before short covering or profit-taking entered late. Some grower somewhere will say his late maturing beans were hurt by the frost but traders don't see any damage adding to a measurable enough amounts to change production tables.
After the close, our Monday 3 PM central time crop progress and condition report came out. Corn is estimated at 24% in good to excellent condition, unchanged on the week, up 1% from the August average and well under a year ago of 52%. The 1% increase on the month is hardly worth mentioning but with the next major monthly
USDA crop report due on October 11, traders will be thinking production estimates will be at least unchanged if not a touch higher and not lower. Harvest for corn was put at 39% complete versus the five year average of 13%. 88% of the crop is fully mature and ready to cut. Even though were well ahead of the five year average, one would think that prices, historically high, would have a panic harvest pace going to cash in on the riches. It could be a suggestion growers intend to store more corn this harvest for possibly higher prices down the road and sitting in the fields longer allows for drying and better storing.
Bean condition came in at 35% good to excellent up 2% from the week prior, the highest rating since July 9 and 5% over the August average. This will set up a thinking of a higher production estimate for the October 11 USDA crop report. 73% of the crop has dropped its leaves and ready for harvest. Harvest was put at 22%. Wheat planting was put at 25% complete about equal the five year average. WXRISK.com the AG weather site sees .50 to 2.00 inches of rain this week for key wheat producers Kansas, Oklahoma, Texas and Nebraska. This will not only help early emergence but encourage a faster planting pace to take advantage of the better topsoil moisture. Four weeks ago these states were still in the grips of the summer drought.
Friday, September 28 at 7:30 AM central time, the USDA will release its final estimates on winter wheat and spring wheat crops. Average estimate for all wheat combine is 2.271 billion bushels versus 2.268 on the last report. The range is 2.237 to 2.310. The 2011- 12 crop was 1.999. Anything within the range we will end up neutral at the end of the day as focus in the long-term is about demand and will the US take on a primary
export role in the world this year now that smaller crops are coming out of key export competitors Australia and Russia.
What traders really look to is the quarterly stocks report to on Friday. The pre-report trade estimates read like this. Corn stocks on hand as of September 1 at 1.145 billion bushels versus a year ago September 1, 2011 of 1.127. The ranges of guesses are 887 million bushels to 1.350 billion bushels. This is the highest average in two years for that date. We believe the number comes as the trade saw the earliest planting date completion on record lead to an earlier maturing crop and therefore an earlier harvest.
Some pre-report estimate suggests 600 m.b. were harvested in August that normally would have been harvested in September. Note, the September crop report jumped new crop year ending stocks to 733 m.b. from 650 m.b. the month prior. The new crop year for corn began September 1. It could be a prelude to a bigger jump up in the
stocks on hand. Traders will fear a bearish report.
The bean average estimate is 130 million bushels versus 215 year ago, and a range of 110 to 152 m.b. Because of the low number to begin with, the lowest in 8 years, anything under his bullish and over is bearish after its release. Should it come in bullish at the low end of estimates we will open higher but expect selling to enter as the seasonal downtrend dominates but a number under the low end of that range will give us a sharply higher open and close. Careful of a short covering rally ahead of the report as the shorts have the profits, therefore the risk.
Technicals read like this. December corn support is 7.35. A close under and 7.05 is next. Resistance is 7.52 then 7.75. November beans support is 15.90 then 15.50. Resistance 16.80. December wheat support remains 8.55 then 8.15 with resistance at 9.25.
This report can be found on the Alpari website. Just click Alpari Academy then Grains. All my prior reports are archived as well.
The article is provided by Alpari