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PFGBEST
190 S. LaSalle St., 7th Floor, Chicago, Illinois
800-935-6487
The Grain Report: SHORT WEEK AHEAD
(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.
<>On corn basis
December futures, if crude oil is up to start the week and the dollar
index
down, corn will test 4.12 resistance early. The reverse of those
outside
markets and corn could pull back to 3.82 area. At which point you
should
be a buyer as we expect to see 4.30 resistance hit off the
results of the
December 10 U.S.D.A. crop report. If a correction doesn’t occur,
buy on a
move through 4.12.>
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
November 20, 2009
Tim Hannagan,
PFGBest
thannagan@pfgbest.com
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