Morning Update 9-26-12

Markets are a little defensive to start the middle of the week.  Many are testing some key support areas on the charts and some have broken down to new lows.

Around 9:20 markets have corn off 11-12 cents, beans down 24 cents, KC wheat off 9, MPLS wheat off 9, and CBOT wheat down a dime.  All of the grain markets are within a few pennies of the lows.  Outside markets have the equities flat with the DOW off 5 points, the US Dollar firmer by 300 at 79.875 on the cash index, crude off nearly a 1.50 a barrel, and Gold off about 15.00 an ounce.  European wheat is about unchanged.

There is a wheat tender out by Egypt but it looks like it will go to the French; it does look like the US is getting close to being competitive and from what I read the US SRW offer was actually lower than the Russia offer by about $16 a tonne.  Some of my sources do say that the French wheat is about exhausted.  Bottom line is we still need to see the US start to get some business before we can get too bulled up.

Most Australian crop estimates remain in the 20-20.5 mmt range; well below USDA estimates.  There is some rain in the forecast for both Australia and parts of the HRW belt; comments are that the rain might be too late in parts of Australia.  There was also a comment of cold snap effecting wheat in Argentina.

Despite some bullish type news wheat remains stuck in its recent trading range; dragging it down is the row crops today.

Corn has broke the lows from the past couple weeks in this morning’s trading; leaving it’s charts vulnerable.  The same has happened on beans; new lows for the move.  Perhaps this technical weakness leads to more fund selling as we approach end of quarter, end of month, and the USDA report. 

In theory the price break should help out our overall supply and demand situation; as it should add or at least stop curbing demand.  With the present tight fundamentals I don’t think one should get too bearish; but keep mind there are so many changing factors and at the end of the day if money flow wants to exit or if some world economic meltdown happens it really doesn’t matter how much, corn, wheat, or beans we have or don’t have.  If things are actually super tight and the board see’s extreme pressure continuing then basis will eventually do the work.  Right now basis for the row crops is defensive; many areas have no nearby bid on beans. 

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