CORN BUYING NOVEMBER 10
We started the week's reports with Mondays weekly export inspection report showing 23.3 million bushels of corn was inspected for near term export versus 25.5 the week prior, 23.1 a year ago and four week average of 28 m.b. We need to be between 30 and 39 m.b. to be demand price friendly and over 40 m.b. to be demand price bullish. The recent slowdown in demand can only be explained by product availability of which is next to nothing as corn harvest is one of the slowest in history. As more of the corn comes thru the combine in November we look for demand to surge. One of the issues will be finding quality exportable corn as more and earlier harvested corn is diseased from the excessively wet October and this corn is of no value to exporters and feeders but ethanol guys may step in and buy to brew. That's to be seen. The crop progress report after the close Monday put 67% of the crop in good to excellent condition down 2% from the week prior, a new low for the crop but over a year ago of 64%. This should lend thought to thinking that the November 10 crop report will cut corn production over last month's report. Harvest was put at 25%complete up 5% from the week prior but under a year ago of 53% and our 10 year average of 71%. This report should be ignored as funds have moved their mindset to trading what they perceive the production number is. No one cares about the pace of the harvest as the crop is done growing and it's all about the final number on production so that we know what ending stocks will be. Harvest completion is certain but production is widely questionable. As I noted on my Friday update ,this week will be an up week as the trade fear is next week's crop report could come in with lower production numbers and this over the course of the week will have short positions buying out and aggressive longs entering on dips. No one wants to be short come next Tuesday as the market trades fear before fact. I called for Monday and Tuesday to largely follow crude oil and the dollar index and we have seen that so far. Wednesday to Friday pricing will follow early pre report crop estimates. Some of the old school commercial minded Ag guys will continue to look for bigger yields and a larger crop number but more should lean towards a lower number off October's miserable growing weather. On Friday I gave 3.60 as first support to buy basis December. Sunday night trade low was 3.594. I said if 3.80 broken buy as well. We went thru 3.80 Monday on the close. Support now basis December futures lies at 3.64 with next resistance at 4.02 then 4.08. In conclusion, buy dips on the day and look for a higher close on the week as traders get positioned for what should be feared to be a bullish November 10 U.S.D.A. crop report
Monday's weekly export inspection report showed 63.6 million bushels of beans were inspected to be shipped near term versus 49.1 the week prior, 51 a year ago and four week average of 27 m.b. Key world player China was in for 39.3 of the total. This is a continuation of what we prepared you for long in advance and that being China would be a major buyer of U.S. beans as harvest began. Look for this ravenous buying to continue until the last bushel comes to market. China not just needs the high protein crop for its own needs near term but they are buying U.S. beans as insurance against another South American crop failure. So expect China to over book U.S. beans thru harvest but don't lose site that the rest of the world is in here as well. 24 m.b. went to all corners of the world with active players being Mexico, Iran, Israel, Turkey Japan and beyond. The crop progress report Monday showed 63%of the bean crop is in good to excellent condition, down 2% from the prior week but 6% over a year ago. Like corn, beans too came in with its lowest rating of the year and this will lead to pre report trade estimates for next Tuesdays crop report to show a lower bean production number. October was a miserable final month for corn and beans with record rains, frost, freeze and too cold for full maturity to occur on our latest planted acres. Harvest came in at 51% complete versus 44 the week prior, 85 a year ago and 10 year average of 87%. This is the other reason for such strong demand as we have over half the crop available for ownership. Some might find my wording of ownership unusual for the market as the common term would be, available for export. But, this is a different grain game in the world now. It used to be you sold grain for feed and human consumption. Now, it's purchased for trade and hedges. China is buying beans as a hedge or insurance against the world's only other exportable world bean crop in South America in case of growing season problems there into March. China and other countries buy corn and beans of the highest quality in the U.S. for their needs and re-sell lower grade grains they hold from their own crops to surrounding third world countries less concerned about quality and more concerned about quantity at value. The problem here is that if Argentina and Brazil have big productions of beans ,China who has been overbooking U.S. beans as insurance may cancel many of these purchased for March thru May shipment and rebuy South American beans late January thru February when their yields are made as South America will offer beans at a price lower than any U.S. posted price to insure it moves as they don't store grain like we do here in the U.S. Ok, what's next? On Friday I said get ready for an up week. I gave 9.55 as support Sunday nights low as 9.62. Pretty close. I said a move thru 9.90 can be bought as well. Were sitting over 10.00 at the writing of this report. Don't buy sharp daily rallies as this is a profit taking business daily, but buy dips and expect a higher close on the week as the trend and Index funds get positioned for next Tuesdays report. New support basis November beans lies at 9.75 with 10.25 as next resistance. A close over 10.25 sets up 10.65 as next stop so odd to longs if 10.25 taken out.
Mondays weekly export inspection report came in at 11.9 m.b. down from 14.4 the week prior and four week average of 17 m.b, most would assume with the big break last week off the recent rally that buyers would have returned but I have noted repeatedly that demand can't drive this market on its own, the market needs supply side production issues as ending stocks inventory is just too large. Near term, wheat remains largely a follower to corn and beans. The crop condition report put this year's winter wheat crop at 64% G-E condition up 3% from the week prior and 3% under a year ago with 79%planted. It's a very good crop rating this early giving it some room for error in the growing season. The crop will go dormant at month's end then break dormancy next March and finish the growing cycle into the late May, June harvest. Early crop condition is not criticle to pricing. The market prices condition changes into the futures when yields and quality are made or lost in April and May. There's an issue in the report the trade is watching and that's the planting of the soft red wheat variety planted in the eastern grain belt. Fear is that corn and bean acres will be harvested too late to plant winter wheat which is planted on the same acres. Illinois is only 19% harvested on corn and 35 on beans with wheat seeding at 35%. Indiana is 28% harvested on corn and 63 for beans while wheat seeding is 55%. It's a concern, but drier conditions the next 10 days will see the harvest soar leaving time to get wheat in, though late. Last Friday we said buy December wheat on first support at 4.88. The Sunday night low was 4.87. Then buy on a move thru 5.08 and we did that Monday late on the close and hit a 5.194 high today so far. December futures now find support at 4.90 with next resistance at 5.28. Add on a move thru 5.28. Note, wheat is in a followers roll to corn and beans. The tail of the dog. Be careful late Friday and next Monday as long corn and bean position traders may sell wheat as a short hedge to hold risky longs into Tuesday crop report.