Grain futures, with the exception of soybeans, backed off today from the forecast of ideal harvest weather this week and month end profit taking by the funds. Meanwhile, fear of inflation because of quantitative easing by the Fed’s will provide underlying support. In order for inflation to become a serious threat, however, demand for credit must improve. Right now, businesses are not borrowing, as they are uncertain about the future of the economy and potential tax increase next year. Currently, the funds are long a record 4.255 BB of corn, while their long position in soybeans stands at 1.580 BB. Eventually, they will be their own worst enemy as the price decline in 2008 serves as a reminder.
The next “shaker and mover” for the grains is the stocks report on September 30th.
Corn:
December corn traded to 528.75 and sold off closing at its low. Look for a pullback lasting 3-5 days With two supports on either side of 500. For the intermediate-term, a rally to the mid-5’s is expected. Meanwhile, there is a more bullish pattern showing the potential for prices advancing above six. If we break through that resistance we could move higher to mid-November. Right now, we will have to see which pattern unfolds.
New crop sales should currently be at the 50 percent level.
Soybeans:
November soybeans were higher and rallied to 1144, which appears to be a short-term top. Look for beans to follow corn lower to near 11 then, move higher in the mid-upper 11’s. The bulls are pushing a pattern than move the price north of 12. Be alert for a top that could occur mid-October.
New crop sales should be at the 45 percent mark.
The unsold portion of the crop is protected with a long November 940 put.
Wheat:
December wheat rebounded and remains locked in a range from 677.5-757 since August. While there is solid support at the lower end of the range, a decline below it cannot be ruled out. Longer term, there is a pattern showing the potential for prices advancing past the August high. We will have to see whether it unfolds.
For now, old crop sales should be at the 70 percent level.
Corn above 6? Soybeans above 12? And wheat breaking through the doldrums and getting out if its trading pattern? Want to know exactly when I expect that to happen and what the chances are. Find out what other producers already know, sign up for a FREE! trial subscription to our daily newsletters.