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Ron and Sue Mortensen: Report watch begins

10/29/2010 @ 2:19pm

Although it is ten days away, the market is focusing more and more on the USDA’s November reports due out the morning of the 9th. Key items of worry include corn yields and increased soybean demand.

Soybeans first.  Traders continue to dial up their projections for bean export sales, as China continues on its buying spree.  For the second week in a row, export sales were two million metric tons, with China the largest buyer.  The Chinese need to buy over one million metric tons per week (from the US, Brazil and Argentina) to cover their needs.  They are simply a large continuing presence in the marketplace.  

Corn next.  Yields in some ways are not the attention grabber they were earlier in harvest.  No matter, most in the trade are still looking for yields to decline in the November report.  But by how much?

On the demand side, the market seems comfortable with the current USDA estimates.  This week’s export sales were larger than last week’s tiny number, but not by much.  The big question mark here has actually become China.  There are rampant rumors China will be a large (2-5 mmt) buyer of US corn.  No actual news has surfaced, but their strong commodity buying spree and increasing feed demand leads to questions.     

The market has also reacted this week to the first set of winter wheat condition reports, which highlighted the dry conditions of this fall. There are more acres, but not great stands.  Talk about potential small crops in Russia and the Ukraine added to the anxiety.   

The risk of loss in trading commodities can be substantial.  You should therefore carefully consider whether such trading is suitable for you in light of your financial situation. 

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