by Duane Lowry
Wednesday, August 17, 2016
Corn traded on both sides, inching closer to building resistance in the $3.40-45 zone, basis Dec, settling up 2 1/2 cents. News is stale. Traders seem focused on waiting for harvest and fearing further price pressures eventually unfolding as we approach harvest and hear harvest yield results. Users however, are anxiously awaiting harvest and have plans to quickly seek to build ownership and take advantage of cheap supplies. Producers are discouraged by prices, but are very reluctant to make sales here, even though they fear lower prices may unfold in the weeks ahead. The exception to this is producers that know they must make some sales at harvest are willing to make those sales now, with ideas that they will establish some type of re-ownership position through options and/or futures if prices do in fact ease lower into early harvest. Due to abundant supply expectations, corn will probably continue to have the weakest trader sentiment in the ag complex. I see prices working back towards a probe of $3.20, basis Dec, but I do not anticipate much ability to build/sustain trending lower momentum once we do reach these price levels.
Soybeans traded on both sides in what seemed like a very schizophrenic session, settling up 8 3/4 cents. News is limited. Bears are focused on supply expectations and upcoming harvest yield reports. Bulls are focused on global demand and they are willing to look past whatever near-term harvest pressures may develop, choosing instead to focus on the “what ifs" associated with a new South American production season and on global demand, which is a major reason that the US can produce in excess of 4.0 bil bushels and still have only 330 mil left at the end of the season. Short-term technical conditions suggest prices can soon turn lower, as current prices are 73 cents off the early August lows. Longer-term downside potential below the early August lows is likely to be limited. I too am one of the bulls that when looking past the next several weeks of harvest, sees lots of potential for prices to improve through the winter and into early spring. Many producers were active sellers of soybeans on price jumps during the growing season, but it may pay dividends to search for futures/options strategies that can provide some re-ownership opportunities into at least the early spring period. Global demand will be robust and the trade will be quick to respond to any hints of South American production problems.
Wheat traded both sides, settling up 2 1/2 cents. News is stale. Global pricing structures should be supportive to US futures, limiting the scope and duration of any near-term downside probes. Wheat has the ability to see price improvements unfold during the next 90 days and is quite capable of ignoring any row-crop harvest pressure sentiment that may develop.
In summary, there is little reason to be bearish wheat. Corn and soybeans still must face the reality of record levels of US production to harvest in the weeks ahead, which can weigh on price values after recent near-term strength. Corn is likely to be the weakest link in the ag chain during the next several weeks. Soybeans will have longer-term bulls facing off against short-term harvest-related bears for near-term price direction.
WEATHER: Midday weather forecasts were largely unchanged from this morning’s discussion. Conditions and forecasts remain favorable/non-threatening for most areas.
Wednesday night's grain trade outlook: Short-term technical conditions warn of limited additional near-term strength potential and likely a soon turn back towards price weakening. Producers who know that they must make some sales in the harvest window may want to consider sales this afternoon/evening, choosing then to examine possible re-ownership strategies that can be established on price weakness that may occur into early harvest.
Humor/Quote of the Day:
There is no end to the things you don’t understand. The mind will search for a lie to give it an answer you can understand.
-- Shannon L. Adler.
Public Relations is at best promotion or manipulation, at worst evasion and outright deception. What it is never about is a free flow of information.
-- Heather Brooke.
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