Headlines:
- CHINESE CORN PRICES COULD EXTEND 25% DECLINE, SAYS IGC
Chinese corn prices, down some 25% over the past year, could be set for further declines, the International Grains Council said, amid worries that the weakness is weighing on US values too. China’s corn prices – as measured in Jinzhou, in the key north eastern producing region – have fallen close to 1,800 yuan a tonne, down some 600 yuan year on year. The drop, which has extended a decline from 2,600 yuan-a-tonne touched two years ago, reflects changes to China’s subsidy regime – first a drop of more than 100 yuan a tonne last year, to 2,000 yuan a tonne, in the guaranteed procurement price, followed by this year’s more radical reforms. The government earlier this month unveiled a 30bn-yan ($4.5bn) corn subsidy program based on seeded area rather than production for the four key north eastern producing provinces of Heilongjiang, Inner Mongolia, Jilin and Liaoning, which between them are responsible for some 40% of domestic output. The revised handout works out at payment of about 1,940 yuan ($292) per hectare.
Summary:
Everyone was ‘seeing red’ on the board all day long. All week long, Soybean has be devoid of the ‘new export’ announcements that were instrumental in helping to keep prices afloat last week with investors banking on the potential of demand that could meet the USDA expected yields. Instead it would seem that Managed Money has been taking advantage of unwinding their long positions into strength. For several weeks now we have outlined 1021.50 as key resistance in our published weekly newsletter. After making a low on August 2nd at 943, November Beans moved up for 14 trading (20 calendar days) topping at 1020 on August 20th. The move from low to top was 8%. The numbers associated with that move came together to that foreshadow a possible top was at hand. The Fibonacci time series has the numbers 1, 2, 3, 5, 8, 13, 21, 34…etc. I have highlighted the numbers that squared out in time and price. Beans were under pressure most of the day and only in the last 45 minutes of regular trading did it get a bit of a breather. November Beans lost 8.50 cents beyond yesterday’s selloff.
During intraday trading Wheat futures touched 10 year lows. The International Grain Council (IGC) raised its global output projections for the 2016-17 marketing year and the Wheat futures did not respond well. Wheat blew through our minimum price objectives ending the day down a whopping 17.50 cents. Corn futures rounded out the day with a 6.75 cent loss. The Pro Farmer Tour official results for both Minnesota and Iowa exceed their respective BPA three year averages.
When the COT report is released today it may show more selling has been at hand.
