Futures Commentary – September 30th, 2011

By: Brock Schimbeno – Grain Hedge Broker

In the face of European solvency concerns, positive economic data, and the Quarterly Grain Stocks report, the equity and commodity markets are having a tough time deciding if it is time to take on some risk or stay on the sidelines. The Dow has had a volatile week but is up 382.50 to 11,153.98 at the close today. Oil has gained $2.35 to settle at $82.50 as of Thursday. Gold has fallen $24.10 to $1,615.50 at the close today. The dollar index has fallen modestly, which gave some support to the grain markets.

End-of-month and end-of quarter profit-taking and position evening have been a main stay this week as corn has lost 6 cents ending trade today at $6.32 ½ on the December contract. Adding pressure to the sell off is a quickly advancing harvest and uncertainty about global demand. Exports did rebound slightly and were reported as 823,100 MT. Friday offers up the Quarterly Grain Stocks report with early indications being slightly bearish.

Soybeans continue to be the leader to the downside in the grain complex losing an additional 28 cents and recording $12.30 for the close on the November contract. The market hit a 10 month low this week and is pressured by a pending harvest and continued stiff competition from South America. Exports were a little better than expected at 321,900 MT. Again, the Quarterly Grain Stocks will provide some new information for the market to digest.

After selling off for most of the month, wheat has found footing and has gained 15 ¾ cents to close Thursday at $6.54 ¼ on the Chicago December contract. Supporting the market has been the soaring Minneapolis Grain Exchange contracts and the continued drought for the Southern Plains as we head into the planting season there. Exports remain rather light at 521,600 MT, which is down 41 percent from the previous week.

Depending upon the day this week, it was either a risk on or risk off mentality. Some relief has come in the European debt crisis with the aide of relatively good economic news domestically. The grain markets, however; are eagerly awaiting the Quarterly Grain Stocks report due out tomorrow morning.

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