The USDA Will Release Its Sept 1st Grain Stocks Report At 11 AM Friday. This Will Give The Market Direction.
The USDA will release its Sept 1st quarterly grain stocks report at 11 am on Friday. This report will give us the details of the last quarter of the ‘17/18 crop year, and will give us the starting point for the ‘18/19 crop year. We will be able to see exactly how many bushels of corn and beans were used and exported during the last quarter, and the resulting ending stocks of the last crop year. The ending stocks from last year will become the beginning stocks for this next ‘18/19 crop year. The average trade estimate for Sept 1st grain stocks are as follows: corn – 2.01 B bu, beans – 401 M bu, and wheat – 2.343 B bu. Any major deviation from these numbers on Friday will cause the market to react, possibly significantly, if any major differences occur. Our demand for corn has been rather large as of late, but just the opposite with beans without participation from China, our largest bean buyer. Thus, I would not be surprised if corn carryout was trimmed a bit, but our bean carryout will likely approach 1 B bu for next year.
We have seen a nice rebound in futures prices over the last 2 weeks. Dec ’18 corn futures have rebounded 23 cents higher in the last 10 days, and Nov ’18 bean futures have traded 46 cents higher during the same period. The funds had accumulated a modest short position in corn and beans, and this rally was caused by them covering (buying) a good portion of this short position. A general lack of farmer selling has allowed the futures to bounce back and the basis as traded at the Gulf has also firmed 6-8 cents on both corn and beans in the last few days. The rain system that moved through most of the Corn Belt last weekend slowed harvest activity down enough to allow futures and basis to firm as a result. Once harvest activity ramps up again, expect downward pressure to resume again on futures and basis.
Friday’s report at 11 am will also give the market direction. For now, both corn and beans have rallied enough in the last 10 days that both are at upper resistance points on the charts. If you have corn or beans that you must sell for harvest, I would seriously consider rewarding the market on this rally. There is a very good chance that when harvest activity resumes, and more and more farmers everywhere begin to harvest grain, the futures and basis will soften, possibly significantly, through much of October. It will likely take until mid November until the basis finally firms locally, and we see noticeable improvement, especially in beans. Depending on corn demand, the corn basis this year could firm more easily than beans, just because we have so many beans in this country as compared to a normal year. But despite this, corn carryout has been trimmed to just around 1.8 B bu or so, and corn demand remains stout.
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What Are The Charts Telling Us?
Here are the support and resistance levels for cash and new crop grains. These are all futures levels as traded at Chicago:
Cash Corn – Dec 18 Corn Futures – Support at $3.48, Resistance at $3.64, Place Targets at $3.60
New ‘19 Corn – Dec 19 Corn Futures – Support at $3.83, Resistance at $3.98, Place Targets at $3.93
Cash Beans – Nov 18 Bean Futures – Support at $8.12, Resistance at $8.58, Place Targets at $8.50
New ’19 Beans – Nov 19 Bean Futures – Support at $8.79, Resistance at $9.24, Place Targets at $9.14
New Wheat – July 19 Wheat Futures – Support at $5.36, Resistance at $5.63, Place Targets at $5.53
To see where grain futures are currently trading, please click here.
As always, if I can help you with anything, please call me at the grain office in Readfield at 920-667-4955, ext 2 or send me an email at email@example.com.