Corporate earnings have driven a relatively quiet week in the macro markets, but
the Dow has managed to gain a couple hundred points thus far. Sovereign debt in the
European Union continues to make headlines while the dollar index has fallen sharply
propping up commodities in general. The grains are focused on fundamentals and are
watching demand closely.
Export sales for wheat beat expectations at 410,000 MT, corn met expectations
at 166,700 MT, and soybeans missed expectations 523,400 MT. A mixed bag this week
for export sales, but both corn and soybeans are currently ahead of pace to meet USDA
estimates for the year.
Staying on the demand side of the equation, ethanol production fell slightly as
did stocks of ethanol. It is interesting to note that even with the slowdown of production
from last year’s levels, corn used in ethanol production is still running ahead of pace to
meet current USDA estimates. At this time, revisions to ethanol demand of corn are not
expected in upcoming USDA reports, but the pace will have to be monitored as we move
through the marketing year.
As far as the supply of grain on the world market is concerned, Strategie Grains
based out of France made revisions to their anticipated European Union corn and soft
wheat crops. EU corn was revised lower by 900,000 MT to 52.8 million MT, which is
down 20% from last year. The wheat crop was trimmed 700,000 MT to 123 million MT,
which is off 4% from 2011. With continued cuts to world production of both corn and
wheat and the dollar index at relatively weak levels of late, we could see a pickup of US
exports in the coming weeks.
Technically speaking, corn is back above $7.50 and back above the 20-day
moving average that was providing resistance earlier this week on the December daily
chart. The next resistance level to keep an eye on is the high reached near $7.75 after
last week’s USDA reports. For soybeans, the market has rebounded sharply off of multi-
month lows printed Monday to trade above the 38% Fibonacci retracement level in the
$15.25 area. Overhead resistance now comes from the 100 and 20 day moving averages
in the $15.50 area on the daily November chart.
Looking ahead to tomorrow, we get the latest revisions to Informa’s harvested
acreage and 2013 planted acreage estimates. Also, after the session closes the Cattle on
Feed report will be released.
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