When a U.S.D.A. crop report is released with no surprise to the market, the market comes in the next day and says What Report and moves on to trading the next day's most important issues. Tuesdays U.S.D.A. monthly crop report was that kind of a report. A little bit of a yawner with numbers in line with the range of estimates. The conservative report is the government's way of saying this extremely late and uneven growing and harvest season has yet to unveil the true crop size and if any surprises , bullish or bearish lie ahead when harvest is complete. Corn production was pegged at 12.921 b.b. It was 97 m.b. under last month, 74 m.b. under the average pre report trade guess and about in the middle of the range of estimates. It's also 820 m.b. over a year ago. The government cut its yield estimate from last month's 164.2 to 162.9 bushels per acre. Clearly they feel the late maturing corn was hurt by the frost in early October not allowing late corn to fully mature. They put ending stocks at 1.625 b.b. down 47 m.b. from last month even though they cut export projections by 50 m.b. I would ignore their export cut as it was based on the recent slowdown in exports. When more corn fills the export pipe line, exports will pick up. Only 37%of the crop is harvested versus our five year average of 82%. In the long term expanding world feedlots numbers of chicken and pork will demand more U.S feed corn over the next 6 to 9 months. This is a bullish report long term into next spring as a shrinking crop and inventory while demand usage expands leaves room for higher prices before June but near term is a neutral report and shouldn't change the trend. We come in each day and look to crude oil and the dollar index for daily direction with the weight of a faster harvest on the markets shoulders. Technically here's how I see it. December futures find support at 3.74 today Wednesday and 376 Friday. Anything near support should be bought or buy on a close over resistance which is 4.04 thru Friday. Remember, What Report, its back to index funds and trend following funds buying or selling their portfolio on crude oil and dollar index trends and grains following. The bean production number was estimated at 3.319 b.b. up 69 m.b. from the October report. 50 m.b. over the average pre report trade guess and in the high end of the range of guesses. This came as the government saw the crop further along in maturity as the worst of October weather hit. They came to the higher number by pushing yield to 43.3 b.p.a. versus 42.7 last month. With 50% of the harvest complete as of November 1st they had a good sample to base figures on or did they. The last crop condition report of the year showed 63% of the crop in good to excellent condition. Illinois was 58% and only 35% harvested. Missouri 60% G-E and only 33% harvested. In short, we harvested the best conditioned beans in the first half of harvest in the western grain belt and the lower rated beans are next to show up from the eastern grain belt on the December report. It's too early to trade that but it's certainly food for thought before the next report. Soybeans as of Monday were 75% harvested. The ending bean stocks or carryover was put at 270 m.b. from the October report even though export projections were raised to almost offset the increase. The corn and bean production changes were so small you can't expect a trend change in the market. Here's how I see beans technically. January beans have support at 9.55. A close under and 9.30 is next support. Minor resistance lies up at 9.90. A close over and next stop is major resistance at 10.20. Remember, What Report. There back to trading crude oil and dollar index trends that move fund buying and selling. There were no production numbers for wheat so it left only the bearish ending stocks number to trade. Wheat ending stocks come June 1, 2010 were put at 885 m.b. up 21 m.b. from October and 16 m.b. over the pre report trade estimate. World ending stocks were put at 188.3 m.m.t. up from 186.7 last month. This is why wheat demand here is so slow. Importers can go to any port of low cash bid. They only buy as needed on the month and save money by not having large inventory and paying storage and insurance. Wheat remains in a followers roll to corn and beans and await a production problem in exporting countries. Technically here's what to expect. December wheat has major trend line support at 5.06 thru Friday and 5.10 Monday. A close under sets up 4.96 then 4.88 as next support. Minor resistance today Wednesday is 5.30. a close over 5.30 takes out a triple top and would trigger chart buying. Wheat remains in a followers roll to corn and beans until supply side fundamentals change. Harvest this week should progress quickly for corn and beans.
The weather site COMMODITYWX.COM sees general dry conditions until this weekend when the upper plains and Midwest get light rains of a half inch or less with 40% coverage. They see next week with light rains Tuesday to Thursday before the end of month sets up warmer and possibly drier. Bean harvest will be 90% complete by Monday while corn sitting in the field longer to dry will hit 90% at month's end. Check out the weather site commoditiywx.com as their doing some good work on the current strengthening EL NINO weather pattern. It's this pattern of weather that will determine South Americas yields after the first of the year. My next report will be Friday.