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Is the harvest bottom in? -Ray Grabanski

Ray Grabanski 10/20/2011 @ 6:56am President, Progressive Ag www.progressiveag.com

Grains have rallied back nicely from lows in early October. Just last week, the markets gained over a dollar in soybeans, and accompanying gains in wheat and corn.  

However, so far this week grains have been disappointing. Including last night's trade, soybeans have retreated 60¢ this week, before recovering early this morning.  Soybeans formed a downside daily reversal Wednesday, including some 25¢ losses by the close, after starting the day higher.  That means there still might be some fireworks left in the soybean market. Even with this week's November options expiring, a rally would be an unusual development, indeed.  

Typically on option expiration, markets stall at previous price levels to let the most options expire worthless as possible.  But recent soybean price action might be leaving more people struggling to keep up with option delta neutral positions with the increased volatility.  

Corn and wheat seem a little more subdued, moving in pace somewhat with soybeans. There are differences though. For instance, corn only had 5¢ losses yesterday while soybeans broke 25¢.  Corn seems to have a little more support under it, with the large Chinese corn purchase last week likely to provide some support (especially this morning, with the weekly export sales to include those 

totals from last week).  Corn is another way of saying "SRW wheat", as CBOT wheat is priced as a feed grain, and actually at a discount to corn prices.  

Wheat is still the cheapest feedgrain on the world market!!!  

Wheat prices have some premium, though, for the HRW and HRS versions, and they are at a bit of a premium to SRW wheat as there are tighter supplies of the higher quality grades of wheat.  SRW wheat should end up in feedbunks across the nation (and world), as prices are providing incentive for feed users to add wheat into feed rations of as many kinds of animals as possible.  That should encourage the feed use of wheat in the near term.  

The key question being asked in most commodity circles is, are the grains bottoms in for the year? Or, do prices have some more downside risk? We may be answering those questions soon, as it appears that soybeans might be testing those recent lows after trading sharply higher last week.  This week, prices are drifting lower as more reports of 'better than expected' yields of soybeans are coming in.  It might be a foregone conclusion that soybean yields might need to 

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