Headlines:

  • corn futures dip amid ideas of US yield upgrade
    It doesn’t look like many investors are holding out for bullish data on Thursday. The US Department of Agriculture is then to release its latest WASDE report, its flagship briefing on world crop supply and demand, and a key even for grain markets. The prospect was not filling investors’ minds with bullish thoughts in late deals on Wednesday, when grains in particular suffered fresh selling. For corn, which for December stood down 0.8% at $3.46 ½ a bushel in Chicago in late morning trading, not far above the contract closing low of $3.45 ½ a bushel set in late August, the selling defied USDA data overnight showing the US harvest running at a historically slow pace of 22% completion. That was below the 29% figure that traders had expected, besides the 37% of US corn typically in the barn by now. However, this slowdown was viewed as a temporary hiccup, with weather improving for fieldwork. “A downturn in rains in central [Midwest] areas through late week will allow corn and soybean harvesting to improve again,” said MDA.
  • World grain markets have ‘recipe for strong volatility’
    Global grain markets possess the “recipe for strong volatility” despite apparently strong inventories, AHDB lead analyst Jack Watts said – likening dynamics to those in banking markets ahead of the world economic crisis. “Complacency over supply, we see have seen that time and time again,” Mr. Watts said, noting that the world in 2017-18 looked like seeing a fifth year of grain production surplus. However, flagging supply risks, particularly in wheat, he said adding that “the recipe is there for strong volatility” in prices. “All looks calm on the surface, but there are key risks to be aware of.”

Summary:

Corn falls 3.50 cents, Wheat slips 2 cents and Beans were flat. Everything remains quiet ahead of the USDA WASDE report due for release tomorrow. Open interest for PUT Options was on the rise today ahead of the report suggesting that the trade want to make sure it had some protection in place in the event of a big decline. The drop in Corn today was particularly of note because it broke and closed below q key technical support level of 348 that had been in play for some time. The potential for volatility tomorrow is high given how the markets have historically responded to October WASDE report. Overhead resistance for the Beans remains in place and Wheat appears to be poised to eventually break its August low. Estimates have been surfacing showing that analysts believe that the USDA may back off from last month’s estimates but the number will still be at record levels.

The US Dollar was weaker today and paused (at least for today) at its technical support level near 92.80. December Crude found some strength after testing near-term support at 50 and may be in play to retest previous resistance at 52.80. If it is able to make a push it could make a run to our secondary target just beyond 54.