Grain markets bob with knee-jerk report reaction

The next big piece of fundamental news hit the market before the re-open Friday in the form of the USDA October Crop Production Report.

The corn and soybean markets crashed Friday on the news, then reversed themselves on Monday. This whipsaw market has now seemed to put a bottom in the market, and we are seeing follow-through in early Tuesday trading.

Today the question seems to be, if the markets are positive now, what happened Friday?

As usual, it is all about the reaction to the reports. In this case, the market did not seem to look at the numbers the same way Monday as they did Friday.

USDA came out with a corn production number right in the middle of my talking points last week. They had 14.475 billion bushels for the crop. That was based on a yield of 174.2 bpa and acres of 90.9 million. The trade was looking for a crop of 14.506, so one would think the market would be supported.

It must be noted that the production was an increase from the previous month’s estimate of 14.395. In fact, corn prices went down almost 11 cents Friday after the report. December futures hit a low of 3.32 1/2. That was still well off the contract low of 3.18 1/4 a few days earlier.

However, Monday we got that back, and more. Monday, December corn futures close at 3.46, up 12 cents. In early trading Tuesday we were up another two and a half cents.

Soybean reaction

The soybeans had a similar reaction, but again on news that should have been positive. The beans crop estimate came in at 3.927 billion bushels, a little under the trade estimate of 3.975 billion. That was a little above the August USDA estimate of 3.913 billion.

In reaction, November soybean prices fell 19 1/2 cents to 9.22 1/2. That was well above the contract low of 9.04, but still troubling.

But, again, the beans came back Monday by 22 3/4 cents, and in early trading Tuesday are up an additional 19 1/4 cents.

The Monday trading was not technically a key reversal, because the Monday high was 9.51 and the Friday high was a quarter higher. Also, we did not close higher than the previous high. We closed at 9.45 1/4, off the Friday high. That is quibbling, really.

Except for that quarter cent, we had an “outside day,” with the low lower than the day before and the high higher than the previous day. That this outside day was a significant chart signal is proven by the nearly 30-cent gain so far today.

Then there’s wheat

Wheat prices have not followed the other grains, but they are not in harvest, except for the spring crops. USDA put the wheat carryout at .654 billion bushels, which was well below the .704 billion the trade estimated before the report.

Carryout may be the cause of the turnaround Monday. Corn was 2.081 billion, less than the expected 2.13. Soybeans were .45 billion, off the .472 pre-report estimate.

The low for wheat came on Sept. 25th at 4.66 1/4. Friday after the report wheat gained 5 1/4 cents at 4.98 1/2. Monday we gained 8-3/4 cents and closed at 5.05 1/4. Currently, however, we are down three cents.

Harvest update

The harvest got back to full swing last weekend, then got rained out in some areas in the wee hours of Monday morning. The rains were sparse the farther south you went, so farmers were running beans Monday afternoon.

The farmers with the fastest pace are 75 percent done soybeans. Almost no corn has been cut in the extreme northern areas.

One farmer reported running a field of corn only because it had bird damage and was starting to show spouts on the end of the ear.