Commodity Market News
November 9, 2015Grain Market Technical Overview Nov.17
November 18, 2015Commodity Market News Nov. 16
Summary
U.S. farmers, beset mostly by forces beyond their control, have taken hard hits to their finances over the past three years. From 2013 to 2015, net farm income dropped by 53 percent, down from $123.7 billion to an estimated $58.3 billion. A one-year drop of 36 percent occurred from 2013 to 2014, when net farm income dipped to $91 billion.
“These are concerning indicators,” says Rodney Jones, Oklahoma State University Farm Credit Chair, and Department of Agricultural Economics. He told participants at the recent Rural Economic Outlook Conference in Stillwater that other indicators also are of concern for the agriculture sector. (Ron Smith, Southwest Farm Press)
Corn
CONAB (the Brazilian national supply company) is forecasting the Brazilian Corn crop to come in slightly lower than last month’s estimates. The new figure comes in at 82 million tons. Additionally on the international front, China’s stock inventory is growing more burdensome. They are considering plans to reduce production and increase export to alleviate current over supply. In last week’s WASDE report, Corn yields came in near the high end of expectations at 169.3 bushels per acre, which in turn made for a carry out that dramatically exceeded estimates at 1.76 billion bushels. The crop size for Corn was set at 13.654 billion bushels. The current harvest is now 93% complete. The increase in ending stocks was a bearish surprise and there is now plenty of corn to meet demand.
Soybeans
Brazil’s CONAB estimates the 2015-2016 Soybean crop at 102 million metric tons. Because of the increase acreage and rising yields, barring any catastrophes, the crop should surpass the 2014-2015 crop.
The USDA report raised Soybean yields to 48.3 bushels per acre versus 47.2 bushels per acre last month. Like Corn it came in at the high end of expectations at 3.981 billion bushels putting pressure on the prices after the announcement. The crop size is now approaching 4 billion bushels, a level that has never been reached before. The carry out grew to 465 million bushels. Export sales are running ahead of pace. The soybean harvest was listed as 95% complete last Monday and is now basically complete.
Wheat
Monday and Tuesday last week were huge down days for the Wheat contract prompting some tender offers by Egypt that were won by Russia, the Ukraine and France. The strength in the US Dollar continues to keep the US Wheat market far from being competitive. France is no longer accepting wheat supplies at a couple major ports. Crop conditions for Wheat improved for the second week in a row in the US current ratings stands at 51% good/excellent.
Crude Oil
Iran will make their intent to increase production known at the next OPEC meeting. In the latest EIA report they are estimating that the world could have record stocks and slowing demand growth that could worsen the current oversupply situation into next year. When the industry starts to get this bearish, we start to believe that a low is due fairly soon. The Baker Hughes rig count rose by 2 rigs, the first gain in 11 weeks. For now, Crude Oil prices continue to remain under pressure.
December 2015 Corn
December 2015 Corn continued to fall after the WASDE report last week, then paused over the Veteran’s Day holiday. It made low on the 10th, then proceeded to make a two bar pullback high into our November 12th turn date. The contract low price now sits at 356. If it is not able to regain the 360 price level we could be looking at a move to about 345. The next potential turning point that we are looking to is December 3rd. That is beyond the 1st notice date for this contract so we would focus our attention on the March 2016 contract.
March 2016 Corn
The short trade recommendation that we presented worked out pretty well. As shown, our entry window was 384.25 to 382.50, stop at 393 and target zone of 370 to 366.75. The target zone was hit on Tuesday and has traded beyond that target region through today. For those that took the trade, if you are not already flat you could consider trailing a stop behind your order at the 370 level. A break down from current level could make for a fast move down or we could see a pullback here that gives us another short opportunity.
Our swing analysis is telling us that we are still in a downtrend and would need to get to 397 to confirm that an uptrend is in place. We will continue to play the downside of the market until it tells us otherwise.
Grain Market Overview October 11
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