CBOT markets started the day on a weak note which continued in heavy volume trade throughout the session. Favourable harvest weather, profit taking from “tired bulls” and a weak technical chart pattern all conspired to hit grain and soy values sharply. Friday’s weak soybean performance and the previously viewed bullish QE3 background started to lose lustre.
It seems the bulls are now looking for the corn and soybean harvest reach 50% before they embark on further buying sprees. Some are fearful of the upcoming stock report which they fear may well include newly harvested corn and make the old crop stocks look larger that they truly are.
Corn was reported at 26% harvested, up from 15% a week ago and 8% at this time last year; soybeans are 10% harvested and progress in both crops is expected to be rapid.
One thing seems certain, and that is if corn priced drop much further there will be no effective demand rationing, indeed it might even stimulate consumption which the balance sheet simply can not afford; hence our outlook. We still view this price dip, sharp though it is, as an opportunity to add to cover at better prices than seen in recent times.

Interestingly we hear that the US EPA last Friday said it would expand its bio-diesel mandate to 1.28 billion gallons from the 1.0 billion which is in place for 2012. This begs the question, “do they have any intention to lower the ethanol mandate as requested by several States?” Clearly, it would seem that this will not be answered until after the November election is decided.