- The day has had potential to be a touch quieter than usual with US banks closed in observance of the Columbus Day holiday, a national holiday in Argentina and Canada is celebrating their Thanksgiving holiday. With the USDA report scheduled for Wednesday it is likely that trading will be subdued until it is released.
- We have seen corn and wheat prices a touch higher with the explanation pointing at a lack of farmer selling in corn, which is elevating cash prices. The farmer appears more keen to sell soybeans and put corn into storage, where it will likely stay until cash is required to finance spring seed and fertiliser. The corn harvest is likely to have reached as much as 44% whilst soybeans are probably above 50% as the weekend saw dry and sunny weather conducive to harvest. The Plains winter wheat planting is also proceeding well with estimates as high as 65% complete.
- Today has been a macro day in Chicago with crude oil pushing to new rally highs and a host of asset markets rising as US interest rate futures are weaker. It should be noted that crude oil chart patterns have formed an inverse head and shoulders pattern, which is potentially bullish, and indicative of a brightening global outlook. Fund managers are looking for value and picking assets that look cheap, and Chicago grain markets could well be viewed as such.
- It appears that India may have secured 500,000-600,000 mt of Black Sea wheat and could now well be looking at cheaper Australian supplies in the immediate short term.
- Wednesday and the USDA report will likely determine price direction for the remainder of the month. A 2016 soybean yield of less that 52 bushels/acre will likely trigger a sharp price rally, although it is strongly rumoured that a figure of 53 bushels/acre could well be published. Corn yield is much less hotly debated with 173-174 bushels/acre widely anticipated. We continue to contend that the grains are hitting, if not have hit, their seasonal lows if the soybean market does not score new lows. However, any strong rally in grains (maybe 20 cents) would have us looking to sell once again. Rangebound trade is still out view.