What a week. We had everything from weather issues to crop reports and harvest concerns. We started the weeks reports with our Monday weekly export inspection report. For wheat it showed 17.2 m.b. of wheat was inspected for near term export up from a weak four week average of 15.5. The trade ignores any improved demand numbers as Tuesday crop report increased our ending stocks inventory to 886 m.b. a record storage. The only thing demand from wheat can do is if it strengthens we could see more short covering by trend following funds short 33 thousand contracts. Corn inspections were 26.8 m.b. up from our four week average of 22. We have seen a slowdown in corn sales to Asian markets that buy 70% of our exportable feed grains, the last four weeks. There are two reasons that account for the slowdown that will soon fade. One, the historic low harvest rate leaves the pipeline of exportable corn pretty empty. That will change the next two weeks as bean harvesting is concluding and combines will attack corn, creating availability of product. Number two, China has been building a large corn reserve. This has had them the last month selling their old corn to surrounding Asian neighbors and key U.S. customers who are more concerned about quantity at value over quality. China will replace what's sold with fresh U.S. corn then those Asian customers of ours will return to their usual buying pattern. China is like a grocery store who puts on sale goods with expiring dates to make room for fresh goods. In other wards their rotating their shelves. The bean inspection report showed 59.9 m.b. of beans were inspected for near term shipment. This was the second highest weekly number ever. Second only to last week's 65.9. Key world buyer China was in for half the total as they overbook U.S. beans to meet protein needs and as insurance against a poor growing season coming up in South America. Last year's drought in Argentina left China to fill their needs entirely on U.S. ports. The grain marketing year for beans began September 1st and ends September 1, 2010. We are nearing sales of beans at 70%of what the U.S.D.A. had expected to sell by next September. Something has to change, either exports level off and or decline or they will continue leaving the government to increase their export projections. Then the price of beans goes high enough to insure we don't run out. The wild card for demand is weather in South America or Brazil and Argentina the number two and three largest world producer exporters of beans behind us. Currently Brazil is seeing too much rain with planting behind year ago and Argentina looking dry again. With bean planting down 20% from the year prior. They'll get it in but can they grow it. With the growing season here over, weather goes to the sideline until spring but we now have to look at weather in South America thru to March as funds will trade weather problems there on our exchange. We saw this Thursday as beans opened 8 cents lower with crude oil down and the dollar index up but rallied up over 20 cents on dry concern talk in Argentina. So, as far as demand is concerned it's a non issue for wheat. We look for a pick up late November into December for corn and bean demand continues at a record pace here until South American weather improves, if at all. If rains come in late December thru to mid February, talk of high yields and production will have china begin to cancel previous U.S. purchases and re-buy on South American ports at cheaper value. No rain and prices here will surge in that period. Corn technical's read like this.
Support Monday basis December lies at 3.70 with resistance at 4.04. buy support or a close over resistance. Stay long in the big picture. January beans have support at 9.55 and major resistance at 10.20. Buy support or on a move thru 10.20. Stay long. December wheat should be bought on dips to support off the 5.10 area but there's minor support at 5.28.