Grains Search for Stability as Harvest Progresses

The nasty trend of fund selling continued today with prices falling another 5-8-cents across the board as funds sold more of their losing long positions and US harvest pressure continued as much of the Midwest is under dry conditions with rapidly advancing harvest. South American forecasts remain non-threatening and although China was a weekend buyer of US beans, the trade ignored the demand news and focused on the potential of even larger US bean yields. The bulls are looking around for any positive news, but the last month has been a continual flow of bearish news.

News and Notes:

• Dry US weather aided harvest over the weekend with rapid progress across the Midwest. SA forecasts added rain to the drier areas of N Brazil to help the already planted bean crop. There is no US or world weather concern.
• The December daily corn chart is on Page 2 and shows today’s further deterioration of the chart pattern as today’s trade took out the post-report low and last week’s low. The next level of support is the low just before the August rally began at $4.56 ½, another 10 ¼ cents below today’s close. The funds sold another 5000-7000 contracts today to further trim their once record long position. The RSI is very oversold, but it can remain that way for weeks.
• Please take a few minutes to listen to the latest Helena FieldLink podcast where early season weed control and my thoughts on the post-USDA report trade and a look at other current conditions.
• China was announced as a known buyer of 4 MBU and was assumed to be the Unknown buyer of another 8 MBU over the weekend. For China to meet their 25 MMT pledge from the May trade meeting, they need to buy 30 MBU every week (330 MBU) to year end. The additional Chinese purchases “promised” by President Trump in the early September trade meeting with China have not materialized for any market.
• The average fall insurance revenue prices are $4.88947 for corn and $12.0972 for beans. With more than half the month gone, the averages will continue to fall with Dec corn and Nov bean prices substantially below the monthly average.

With no weather concerns anywhere in the world and very bearish technical signals the path of least resistance remains lower as even Chinese demand no longer attracts any bullish interest. I wish there were a silver lining in all of this, but unless you are an end user and need to cover those longer-term needs, the landscape is depressing. With the South American planting/growing season off to a great start and no signs that super El Nino will cause any problems in the weeks ahead, there is no layer of support as US harvest quickly moves along. US yields continue to be variable for corn, but the bean yields are consistently impressive from almost every state and are leading to concern that the USDA will again raise bean yields in the November report. There will be something that stops the selling but with no current bullish story, it is hard to know when that might happen. The markets need a big demand and SA weather story to reverse course.