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For corn, a limit-down trading day

10/01/2010 @ 9:47am

CHICAGO, Illinois (Agriculture.com)--Pressure from this week's larger-than-expected corn carryout continues to push the CME Group grains markets into negative territory Friday.

At mid-session, the Dec corn futures are 24 cents lower at $4.71 3/4. The Nov. soybean contract is 22 1/4 cents lower at $10.84 1/2. The Dec. wheat futures are 19 1/4 cents lower at $6.54 3/4.  The Dec. soyoil futures are 90 points lower at $44.19. The Dec. soymeal futures contract is $5.00 lower at $301.90 per short ton.

In the outside markets, the NYMEX crude oil is $1.20 per barrel higher, the dollar is lower, and the Dow Jones Industrials are up 28 points.

Roy Huckabay, Linn Group senior grain analyst, says the markets are still digesting the bearish USDA numbers from Thursday. 

"The gov't gave us a rally of $1.85 when they reduced the corn stocks in June. They found them back, here in September," Huckabay says. 

Now, there are some that believe the market will give that September rally back. Huckabay disagrees though with the naysayers.

"That's not the case, in my opinion. Why? Since the June rally started, the world has lost crops in Canada, the FSU, Northern and Eastern Europe. So, the world is a different place then it was in June. The world's buffer stocks have been used up. So, we need to keep production high."

Huckabay adds, "Today, beans are down sharply, because they had some catching up to do on this pullback. The corn market is cleansing itself. There are way too many 'long' positions and the pullback is chasing people out of them. I'm of the opinion that the market will stabilize. People around the world need to buy stuff. China has a problem with their corn crop, and they are going to have to replace depleted reserves, probably in December."

Meanwhile, Informa Friday released updated yield estimates. The analyst firm raised its corn yield slightly to 158.7 vs. their last estimate of 158.5. They think the gov't will have an estimate of 160.3 vs. their last gov't estimate of 164.0. For soybeans, Informa sees the U.S. average yield at 44.7 bushels per acre vs. their last estimate of 44.5. This number is lower than most believe.

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