Testing recent lows?
Grains have had some time now to digest the recent USDA report, which basically found smaller US crops (wheat, corn, and soybeans), but also found that world production offset much of the reduction in the US crop. That left supplies adequate to survive until another year, with the world relying on the improved crops in Ukraine, Russia, and other parts of the world to 'get through' this marketing year.
Price came under increased selling pressure, and now we are approaching some recent lows at $6.30 Dec corn and $11.70 Jan. soybeans - support levels that already have been tested once in recent weeks. That is especially disheartening with the support levels below these areas few and far between! In other words, if the support fails this time, its look out below! The support under these levels is not very strong, and it could be a precipitous fall if we break through these support levels.
Wheat has also seen selling interest, but winter wheats are already priced as feedgrains so that wheat cannot fall much more without corn also falling (corn is providing support for wheat prices). Soybeans also are relatively low compared to corn (a ratio of only 1.8 or so with corn), a historically low price ratio. If soybean prices fall much more, that will provide even more incentive for the world's producers to plant more corn at the expense of oilseeds.
On the positive side, crude oil has crept back up to over $100/barrel, a 33% rally from the lows this summer of around $75. The strength in crude oil should be providing support to corn prices, the alternative to oil for energy. The hike in crude oil prices should ensure that ethanol production should remain profitable in spite of very high corn prices. That takes some of the pressure off corn prices, and perhaps is one reason why corn prices haven't fallen to the pressure from the rest of the grain complex?
Weather remains an enigma, with HRW wheat areas actually improving in crop conditions this fall as we move into freeze up of winter wheat. The crop is virtually all planted, and frequent rains (at least more frequent than during the summer drought) have improved soil moisture conditions, and now the crop is rated 50% G/E, well above last year's 46% rating even though we started the year about equal to last year's ratings. The direction crop ratings are going is UP, not DOWN like last year at this time. Especially improved is the eastern HRW wheat production area, there rains have been at least weekly for the past few weeks. That has much improved the eastern portions of OK, TX, and KS. However, western portions are still in dire need of additional rains to improve the crop as we enter freeze up.