King Corn!
Today’s Spotlight Market
Here are the pre-report estimates for average yields for the USDA October Crop Production Report
Corn: Average Yield 167.1 bu/acre, down 0.4 bu/acre from September
Soybeans: Average Yield 47.2 bu/acre, up 0.1 bu/acre from September
Fundamentals
There is little doubt that 2015 is turning out to be a difficult year for grain bulls, as a general slump in commodity prices worldwide combined with ample global grain inventories has sent prices back towards more ?historic? price ranges following several years of record highs. However, the Corn market may be attempting to forge a near-term bottom, as market fundamentals appear to be shifting back to the bull camp.
First, it appears the South American Corn production will trail earlier estimates, as producers are expected to shift more production towards Soybeans for the 2015-16 crop year, as current price levels make Soybeans a more profitable crop to produce than Corn. In addition, the trend towards increased livestock production globally should lead to continued growth in Corn demand for feed usage, which could provide a long-term price ?floor,? as both livestock and ethanol producers compete for Corn supplies.
Traders will get a better assessment for the potential size of this season?s grain harvest when the USDA October Crop report is released today at 11:00 a.m. Chicago time. While many traders are looking for the USDA to lower its estimates for both Corn and Soybean production in the U.S., some early harvest reports have average Soybeans yields running above expectations, as crop conditions have improved. 73% of the U.S. Soybean crop was rated good to excellent, which was up from 62% the week prior. The Soybean harvest is also running ahead of schedule, with 42% of the crop already harvested, vs. the 5-year average of 32%. For Corn, early yield reports have been mixed and the harvest progress is behind schedule, with 27% of the crop having been harvested, vs. the 5-year average of 32%.?? ?
Technical Notes? -? View Today’s Chart
Looking at the daily chart for December Corn futures, we notice solid chart resistance at 402.00, which is the exact high that closed the chart ?gap? made back in July. One could argue that prices have formed a ?V? bottom, which would be confirmed should the December futures close above the 402.00 resistance level. Prices are currently trading in between the 20- and 200-day moving averages (MA), with the long and short-term MA?s appearing poised to converge in the near-term. The 14-day RSI has weakened a bit of late and now reads a more neutral 55.86 as of this writing. While resistance remains at 402.00, we find chart support at the September 21 low at 375.00.
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