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Closing Grain Comments

09.07.2010

By Karl Setzer, CTA

Monday, September 7th, 2010

Grains started out the week’s trade on the negative side, but by mid-session, corn and soybeans had worked their way back higher. Soybeans were the leader, taking support from news the U.S. made several soy oil sales over the weekend. Speculation that weather may be cutting soybean yields also benefited that complex. All grains were supported by commercial pricing, but capped by increased harvest pressure and technical profit taking.

Nearly all analysts are expecting reductions to corn yields from the August supply and demand report in this Friday’s September release, but an unchanged number on soybeans. The real question seems to be how much the U.S.D.A. will reduce corn yield, as some private firms believe it will drop as much as 8 bushels per acre. What could easily negate any change in corn or soybean yield is what alterations are made to harvested acres. Even the firms who have cut corn yield have left total crop size nearly unchanged as they believe the U.S.D.A. is too low in their acreage number.

Basis levels at country delivery terminals are rapidly weakening, mainly on soybeans. This is from the advancement of harvest and the building of soybean reserves. Corn basis is also starting to fade, but at a slower rate than soybeans. This is because more internal terminals emptied their corn inventory prior to harvest and have more room for new crop deliveries.

Weather remains the predominant fundamental factor in grain trade. For the past several weeks trade has been focused on drought in the Black Sea, but now there are concerns being voiced over South America as well. The planting season is about to get underway in South America, but cold and dry conditions are causing many producers to hold off on early fieldwork. There are also concerns that later developing crops in Canada may have been affected by early frost.

December corn gained 1 ¾ cents today to close at $4.66 ¼ and November soybeans were 17 cents higher at $10.52, while December wheat was 6 cents lower at $7.35 ¼.

For more information, you may contact Karl Setzer at 1-800-383-0003, extension 237, or e-mail at ksetzer@maxyieldcooperative.com. The opinions and views expressed in this commentary are solely those of Karl Setzer. Data used in writing this commentary obtained from various sources believed to be accurate. This commentary is intended for informational purposes only and is not intended for developing specific commodity trading strategies. Any and all risk involved with commodity trading should be determined before establishing a futures position. Please visit our Risk Disclosure Page for more information on commodity trading.

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