Apparently Rain Really Does Make Grain
Today’s Spotlight Market
Wheat producers saw little to like in Tuesday?s USDA crop report, as government analysts expect U.S. Wheat exports to fall to 800 million bushels for the 2015/16 marketing year. If accurate, this would be the lowest total of U.S. wheat exports since the early 1970?s. So while Wheat exports are shrinking, U.S. Wheat stockpiles are expected to increase, with the USDA estimating ending stocks north of 900 million bushels.
Fundamentals
U.S. Grain and Oil seed producers once again exceeded expectations for this season?s crops, despite above average rainfall early in the growing season. In the November crop production report, the USDA estimated the U.S. Corn crop at 13.654 billion bushels, which was an increase of 99 million bushels from the October report. Average Corn yield estimates rose by 1.3 bushels per acre to 169.3 bushels per acre.? Soybean production also increased more than analysts expected, with the USDA estimating a crop of 3.981 billion bushels, which if accurate, would be a new production record.?
Higher production estimates allowed the USDA to increase its outlook for stockpiles next year, with Corn ending stocks now estimated at 1.76 billion bushels, vs. 1.561 billion bushels last months. Soybean inventories are also expected to see a moderate increase next year, with the USDA estimating 2015/16 stockpiles at 465 million bushels, up 36 million bushels from the October report. If there was one bright spot for Grain bulls, it was the USDA?s expectations that U.S. Soybean exports would remain strong. However, with expectations for an increase in Soybean plantings in South America, the U.S. could see strong competitions for Soybean sales from Brazil and Argentina this spring. ?
Technical Notes? – View Today’s Chart
Looking at the daily chart for December Corn, we notice prices trading near the lower end of the recent price range that has been developing since late July. Earlier we had what could have been interpreted as a head and shoulders bottom chart formation taking shape, but prices never traded above the ?neckline? to confirm the technical pattern. Instead we saw a failure of a test of the August 10th high of 402.00 back on October 7th, when prices fell just short of the 400.00 price level. Since that time, we have seen prices in full retreat, culmulating in a move to new contract lows of 356.00 following the USDA report. The 14-day RSI is very weak, but so far holding just above oversold levels with a current reading of 34.96. 350.00 appears to be the next major support level for the December futures, with resistance found at the October 27th high of 387.50.?
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