Sideways Trade is a Staple After the USDA Reports

The grain markets have traded mostly sideways after the monthly USDA reports
were released last Friday. The equities continue to slowly plod higher with the Dow
gaining 42.16 points to settle at 13,250.11 on Thursday. Oil continues to move higher
adding another 81 cents a barrel to trade near $95.33 as of this writing. Gold and the
dollar index both lost some value with the metal down $9.50 an ounce to $1,613.0 today.
The grain complex has been range bound this week.

What was seemingly a bullish report for corn last Friday actually led to a bit of
selling. For the week, corn is off 3 cents to settle at $7.98 on the September contract
today. Not only was there massive production revisions made Friday, but demand
forecast were also slashed drastically. Feed use, ethanol use, and exports of corn were all
cut in the most recent estimates. Weather is playing less of a roll in prices as most of the
yield damage is factored in. Demand is now in the driver’s seat. Speaking of demand,
export sales missed expectations and were reported as 122,800 MT for ‘11/’12 and
130,600 MT for ‘12/’13.

Soybeans are also down this week losing 17 ½ on the September contract to close
at $16.55 today. Soybeans rallied last Friday as yield forecasts were reduced as was
expected ending stocks. High prices have done little to curb demand as crushings remain
brisk as do export sales. Expected exports were revised higher in Friday’s report and for
this week were reported as 97,200 MT for ‘11/’12 and 924,600 MT for ‘12/’13. These
sales combined beat analysts’ expectations.

Wheat has been the leader to the downside amongst the grains this week. The
September CBOT contract is down 24 ¼ to settle at $8.62 ¼ today. The winter wheat
harvest is all but wrapped up and the spring wheat harvest isn’t far behind. Ending stocks
for wheat were increased in the latest WASDE report, opening the door for a sell off.
Export sales missed expectations and were reported as 396,700 MT.

The grains have settled into their respective ranges after digesting the revisions
to supply and demand by the USDA. Weather will become less and less of a factor as
we head towards an early harvest this year. Actual yield results will now be holding the
markets’ attention in the coming weeks. South American plantings will also be a topic of
interest in the months to come.