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(November 20, 2009) The Thursday weekly export sales report put wheat sales last week at a weak 362,000 metric tons, down 12% from the week prior and 13% below our four-week average.  Slow demand comes as record-ending stocks keep importers buying hand-to-mouth as needed and last week’s rally in-priced of $0.40.  After another $0.40 rally, this week was surely going to see weaker export sales on our next report as we become a too-expensive port for wheat.

Corn sales were 352 T.M.T. off 28% from the week prior and 15% under our soft, four-week average.  40-year low harvest pace leaves little corn for export, but as harvest progresses, we expect Asian demand to pick up.  We need sales to return to 800 T.M.T. or more to turn demand back to a pricing source in the futures.  Mexico came in Friday and purchased 733 T.M.T. That will show up on next weeks report. Soybean sales were 1.349 million metric tons up six percent from the week prior and 58% over a strong four-week average.  Key world player, China, was in for 724 T.M.T. of the total.  The 1.349 were sales for future date shipments.  The report also showed 1.724 M.M.T. were actually shipped for a new high on the marketing year.  As you now, from reading my weekly updates, as far back as July, I noted that when the bean harvest begins, China will enter as a huge buyer to meet near-term needs, continue to build their strategic bean reserve, and overbook bean purchases as insurance against crop delivery problems from South America as they grow their crop the first three months of 2010.

 On November 2, 2009, we were 25% harvested on beans and our export sales came in at 522 T.M.T.  On November 9, 2009, we were 75% harvested and export sales came in at 1.272 M.M.T and November 16 , 2009, this last Monday, we were 89% harvested and this week’s exports were 1.349 M.M.T.  As more came to harvest, demand picked up in a big way.  Prices rose along with demand but nothing extraordinary as ample harvest supplies put talk of running out for later conversations.  Once the harvest is complete and the pipeline to the shipping ports run dry, the only beans left are those sitting on the farm to be held out for higher prices later.  Demand won’t change, it will still be there until South America starts to harvest next March, then U.S. exports will have competition.  Before then, and when the pipeline dries up, we have to expect new highs in prices to occur as cash prices move higher as an incentive for farmers to move grain off the farm to meet demand.  We started to see some of the month-end profit-taking that always occurs.  Wednesday’s break-off, the high to Thursday’s, low, was $0.30 on beans.  Corn broke $0.22 and wheat $0.33 off its Wednesday high.   Month-end profit-taking comes in many shapes:   The last two months saw several consecutive down days, while some months in strong trends see profit, taking-off, rallies, where you’re “up 18” on beans, pull back to “up 2”, then back to “up 18” and back to “up 2.”  All of a sudden, your close is up on the day and yet funds pulled $0.34 out in one day.  We could see some of that next week as markets have three days to execute trading as markets are closed Thursday for our holiday, leaving only Friday and Monday remaining on the month.  So, we could see some very irregular trading patterns Monday to Wednesday.

 January beans look like this.  A start to the week with crude oil down and the dollar-index up, could see beans pull down on profit-taking to the 9.85 area and that would be a dream buy as we expect to test 10.70 and possibly 11.10 in December.  If crude and the dollar start in reverse for the week, we will test first resistance of 10.70 quickly.  10.20 is strong support on the charts and a close under sets up that 9.82 support.  The key is to get long into December and the December 10 crop repo

Last Friday, we said stay long grains into this week, but look for the week’s high to sell as month-end profit-taking enters next.  Now we look to buy the low of next week between Monday and Wednesday, as that low will hold through the results of the December 10 government crop report.  Wheat has resistance at 5.84.  Support today, Friday, was 5.54 then 5.28 if 5.54 taken out.

The weather site commodity COMMODITYWX.COM is taking a real look at South American weather.  This past weekend brought large rain totals to key Brazilian bean growing areas of up to 5 inches.  Additionally, Argentina’s biggest bean area also saw good rains but area in the south and west are still dry having some crop forecasters beginning to cut their potential crop size while too much rain in Brazil keeps acres unplanted.  It’s too early on all these issues to affect the production, but we have to follow weather there closely now as it determines U.S. exports come next March to May.   When you look at rain totals in South America, keep in mind it’s a sandy soil in need of double the moisture the earthy U.S. fields need.  It also dries out quickly and doesn’t hold moisture.

WXRISK.COM sees Midwest U.S. weather as cold with rain Sunday into Tuesday.  The first week  of December looks mild.  Remaining corn harvest looks to continue slow through to next Friday