August 21, 2017
One way our co-op can help add value to your farming operation is to communicate when different opportunities come about during the grain marketing year. In an attempt to add value to the grain marketing services we provide at CHS Larsen Co-op, I will begin to write a Weekly Grain Update in which I will try and highlight significant events that have occurred in the past week and share them with our customers through email and posting on the web. These weekly comments will be located on a tab directly below the grain bids tab on the CHS Larsen Co-op website.
The grain markets have been trading in one direction since the USDA released its August crop report on August 10, 2017 . The government pegged the average corn yield at 169.5 bu and the beans at 49.4 bu. Immediately once these numbers were released, the market sank to new lows and it has not looked back. Frankly, these numbers shocked the market, and caused the funds to sell, and sell in a big way. After having moderate long positions, the funds now have blown out of the long positions and are now slightly short. All of this selling has been a constant downward pressure on the market, and the path of least resistance has been down.
However, I get the sense that this market is very oversold and the funds are looking at various buying opportunities to purchase value. I get the sense that we have pressed this market enough, and we are due for a bounce of some kind. Some supportive justification could be the results from the Pro Farmer Tour, which starts on Monday, August 21, 2017, which find yields not as good as once thought. Additionally, harvest is beginning in the south and much more accurate yield results will start to come in. If there are any surprises, this will add support. However, the trend is clearly lower. If we get a bounce, please view this as an opportunity to make sales on bushels which must be moved to town this harvest. It is very unlikely that this trend will change anytime soon and a bounce is a selling opportunity, and not the opportunity to become bullish.
As I look at the charts today, we have broken below previous low points. This in itself is bearish. Once we hit solid support, we will likely bounce back until these previous lows now become resistance points. Now, Dec 17 corn futures are trading at $363 and it broke down through previous support at $374. This tells me that you should have selling targets in at $372 vs Dec 17 corn futures. On beans, the previous support on Nov 17 beans was $955. I would have targets at $950 vs Nov 17 bean futures for bushels that still need to be sold for this harvest. If we get to these levels, I would seriously consider selling. It could likely be one of the last opportunities we have before harvest to take advantage of a nice pop in the market.
If I can be of further assistance to you, please call me at the Readfield office.