Search

Search:

John Roach's DAILY GRAIN MARKETING PLAN

Overnight Trade

Dec Corn dn 16 1/2

Nov Beans dn 35

Dec Wheat dn 11 3/4

Sell Signals

The corn, bean and wheat markets’ Sell Signals are sliding back down into buy territory. The corn buy signal has reset and will likely give us the beginning of another buy signal today or tomorrow. There should be at least 1 and likely 2 more times to accumulate inventory on weakness between now and November.

What should a farmer be doing about marketing grain right now? There is no Sell Signal in any of our grains and making sales when there is no Sell Signal is usually a mistake. We will likely get another Sell Signal before harvest, but I really wouldn’t plan on selling much on it. In the past several years farmers have regretted the sales they made during August through November.

I would rather get storage lined up for all the bushels you haven’t sold and plan on making sales during March, April, May, and June on Sell Signals. March through June sales on Sell Signals worked again last spring. We expect the spring of 2009 to be just as exciting as the spring of 2008 at least until we can be assured an adequate supply of new crop production.

Market

Asia-Pacific stocks today closed lower: Japan -0.14%, Hong Kong -2.51%, China -2.53%, Taiwan -2.35%, Australia -1.38%, Singapore -0.54%, South Korea -0.57%, Bombay +2.63%. The European DJ Stoxx 50 this morning is trading +1.79% higher.

Traders got ready for the FCStone crop estimate yesterday by slamming the markets lower. Click here to see the FCStone state by state estimates. FCStone came out at the high end of expectations on corn with an average yield estimate of 154.5 bushels per acre. That is up 6 bushels from last month’s USDA estimate and projects a crop of 12.197 billion bushels compared to the July USDA estimate of 11.715 billion bushels.

FCStone’s soybean crop estimate came in at 2.993 billion bushels with a yield of 41.5 bushels per acre. This is not much different from the July USDA estimate which called for a crop of 3.0 billion bushels with a yield of 41.6 bushels per acre.

Informa is due out with their estimate later in the week and the USDA on August 12. Although FCStone did not survey the wheat crop, traders expect the spring wheat estimate to get smaller while the winter wheat crop looks a little bigger. The August 12th USDA reports promise to be the most important in years.

Yesterday’s sharp drop in grain prices was blamed on rumors that one or two large hedge funds were forced to liquidate, plunging Chinese demand as factories are closed for the Olympics, and worry about yesterday’s and other upcoming crop estimates.

Right now the bulls have nothing stimulating them except margin calls which are stimulating them to sell. Welcome to a normal August market during which the season’s low in corn and beans is frequently posted.

The USDA reported steady corn ratings yesterday, at 66% good to excellent, 10 points above last year and 5% above the five-year average. The crop was pegged at 83% silked which is a bit more than the 81% that was the normal level for last week. Could it be that the corn crop is only 1 week behind normal and at much less risk of frost damage than we have been thinking?

Beans came in at 63% good to excellent, up 1 point from last week, 7% ahead of last year and 4% ahead of average. The USDA reported 78% of the beans are blooming compared to last week’s normal 79% blooming. Pods are setting on 37% of the beans compared to last week’s normal of 38%. Could the U..S. bean crop also be only 1 week behind normal?

Corn and Soybean crop ratings normally reach their highest rated level by early to mid-June then decline until harvest. For the past 5 years, the corn ratings average decline from their June peak to this week has been over 10 points while the bean ratings average decline has been over 8 points.

This year instead of declining, the percentage of the corn crop rated good to excellent has increased 9 points while bean ratings have improved 7 points from their early to mid-June ratings.

The only crop getting poorer ratings is the U.S. spring wheat crop rated 56% good to excellent, down 4% from last week, 12% from last year and 2% from average.

In other crop areas, private analysts Celeres estimated Brazil’s 2008-09 bean crop at 63.86 million tons, while consultants AgRural pegged it at 64.14 million tons. Brazil’s recently harvested 2007-08 bean crop totaled 59.7 million tons. These two private forecasts are in line with the USDA’s July 64.0 million ton estimate. The estimates indicate a 1.1 to1.3 million hectare increase in planted area.

Brazilian agronomists expect a 2008 wheat crop of 5 million tons, well ahead of 3.8 million tons last year, and the USDA’s current 4.5 million ton July estimate. Bulgaria also expects a bumper wheat crop this year of 4.4 million tons.

Improving U.S. crop condition ratings and good weather forecasts nearly always increase selling and that is pressing on both the corn and bean market. Everybody can see that crops are looking better in the fields along the highway and users drive those same highways.

If the better rated crops were not enough, weak economic news continues to plague all our markets and commodities haven’t been immune. As you can see from the chart below, the DJ-AIG Commodity Index has fallen to its lowest level since February.

Click here for corn state by state ratings.

Click here for state by state corn silking.

Click here for the state by state soybean ratings.

Click here for spring wheat state by state ratings.

State by State Crop Ratings Continue Better Than Normal

Iowa remains the only state rated below its 5-year average in corn with Iowa, Ohio, and Arkansas holding that distinction in beans.

These data and comments are provided for information purposes only and are not intended to be used for specific trading strategies. This commentary is written as a daily marketing tool to help farmers sell the grain they raise. Although all information is believed to be reliable, we cannot guarantee its accuracy or completeness. Commodity trading involves the risk of loss, and you should fully understand those risks before trading.