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Corn prices remain in downward trend

Agriculture.com Staff 02/10/2016 @ 10:30pm

The Allendale 19th annual farmer driven crop yield survey results are released; ** Results suggest a corn yield of 152.48 bu per acre for production of 12.09 billion bushels. This compares to USDA's August estimate of 155 bu per acre and production of 12.288 billion bushels. Results suggest a soybean yield of 38.43 bu per acre for production of 2.818 billion bushels. This compares to USDA's August estimate of 40.5 bu per acre and production of 2.973 billion bushels.

For The Week: for the week of September 1, December corn futures value decreased 9.3%, November soybean futures value decreased 11.2% and December CBOT SRWW value decreased by 6.3%. Oct crude oil futures value decreased 8%.

Corn Commentary: Friday's trade, still very much influence by outside markets such as crude oil and the dollar. Fear continues of additional hedge funds closing shop and liquidating commodities remains bearish to suppliers but may be presenting opportunity for end users. According to the most recent CFTC reports week net change for futures and options, shows funds liquidating 4,697 contracts of corn, however commercials bought 12,822 contracts suggest end user demand likely on the rise. Corn futures may find immediate direction based on the trades focus leaning into the potential for even a normal frost/freeze which could trim production. As we draw closer to the end of next week, the trade may begin to consolidate as we approach USDA's Sept crop production monthly report. The general consensus is the trade anticipating corn yield to be lower than USDA's present estimate of 155 bu/acre.

Corn Technical Commentary: Dec corn remains in an immediate downward trend. Futures closed below 62% retracement and psychological support of 5500. Weekly charts have left a gap from 5640 to 5554 and may draw corn higher once evidence of consolidation begins to form.

Vital Technical Indicator: the next projected major turn day is forecasted for Sept 25.

Trade Idea(s): Stand Aside

Option Strategy(s): 9/5 Bought 1 600 call @ 22. Risk to 12. Obj 38

Soybean Commentary: soybean futures trade continues to exhibit the influence it receives from outside crude oil futures. Add to Friday's weakness the perception of bushel building rains received and forecasted. However the trade must not be including the extreme east soybean belt which remains extremely dry. Crop conditions fell a hard 4% for the week ended Aug 31. A ray of light did present itself Friday as S Korea bought 110,000 tonnes of new crop USA soybeans suggesting world demand may be surfacing. Adding weight to this thought is the fact funds futures and options net weekly change are lighter by 680 contracts with commercial adding 1,760 long contracts. Soybean futures may find immediate direction from similar outside influences as the corn pit. Focus on crude oil futures direction and frost/freeze discussion. The general consensus within the soybean trade is for USDA to release a slightly smaller yield per acre on Sept 12th vs its August estimate of 40.5 bu per acre.

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