Markets Pause as Traders Await the USDA Verdict

Markets traded lower as news after Tuesday’s sharp rally was unable to find new buyers. Beans and corn gave back some of their early week gains while wheat was sharply lower despite no Black Sea news and increased infrastructure damage by Russian drone attacks. The elevator system is seeing normal harvest pressure with long truck lines and grading issues in many areas and with China on Golden Week holiday, there were no morning sales announced or cash rumors in the market. The dull grinding pace of the markets is likely to continue until Friday’s USDA yield update is released.

News and Notes:

• Tropical storm Isaias is the biggest weather event through the weekend as landfall will occur on Friday at the AL/FL coast and quickly move north with 50-70 mph wind and heavy rain. As the storm tracks north to the Ohio River Valley on Sunday the concern will be the wind on unharvested corn. Crop quality issues remain a problem for large areas of the WCB, and quality is causing mixing concerns and large dock fees. How the USDA determines if damaged crop counts as good crop will be key moving toward determining final yield.
• The December wheat daily chart is on Page 2 and shows today’s rally to and failure at $7.06 at the intersection of the 50-DMA (green line) and the 20-DMA (red line). After the failed test, the trade erased most of the weekly gains. Although the Black Sea remains closed and neighboring Black Sea countries are stopping Russian and Ukraine wheat from crossing their borders, the market does not appear to be pricing in the ongoing problem despite higher world cash prices.
• Weekly ethanol production was above last week and the energy reports showed shrinking stocks of crude and ethanol. Crude oil remains range bound between $85 and $95 while diesel bounced is trending lower but bounced from $4.30 yesterday with a $4.70 now overhead resistance.
• China will end their Golden Week holiday on Friday and there are no indications they are backing off on the agreement to buy 25 MMT of beans and the extra $17 billion of other ag products by year end. High bio-fuel margins and Chinese demand should continue to add support on breaks.
• The average fall insurance revenue prices are $5.01437 for corn and $12.8694 for beans.

There just is not much new to talk about today and until we see the USDA update and China comes back from holiday, there is no point in wasting a bunch of time when there is no real change. Keep harvest moving along and be safe.