Grains Outlook - An Excerpt from CRB'S Futures Market Service

SOYBEANS—Nov soybean prices corrected up to a 1-1/2 month high from their recent 7-month low. Bullish factors include (1) harvest delays that threaten soybean yields with only 30% of the US soybean crop harvested as of Oct 18, well below the 5-yr avg of 72%, (2) USDA’s Oct 9 hike in its US soybean production estimate to a record 3.25 bln bu, less than market expectations, and (3) strong foreign demand as US soybean export sales are up +88% y/y for the marketing year beginning Sep 1. A bearish factor was the USDA’s Oct 9 hike in its US and global carry-over estimates. As of Oct 13, large specs sharply increased their net long position to a large 60,763. Soybean summary: 2009-10 crop 3.25 bln bu (+9.5% y/y), 2009-10 US carry-over stocks of 230 mln bu (+67% y/y), 2009-10 global carry-over of 54.79 MMT (+30.3% y/y).

CORN—Dec corn prices extended their 5-week rally to a 3-1/2 month high, correcting further from last month’s contract low. Bullish factors include (1) harvest delays that may reduce corn yields with only 17% of the US corn crop harvested as of Oct 18, below the 5-yr avg of 46%, and (2) the USDA’s Oct 9 cut in its global corn inventory estimate. Undercutting corn prices was the USDA’s hike in its US corn carry-over estimate and its hike in its US corn production estimate to 13.018 bln bu., the second biggest US corn crop on record. Large specs as of Oct 13 sharply increased their large long position to 136,959. Summary: 2009-10 crop 13.018 bln bu (+7.8% y/y), US 2009-10 carryover 1.672 mln bu (-0.1% y/y), global 2009-10 carry-over 136.25 MMT (-7.2% y/y).

WHEAT—Dec wheat prices rose to a 2-1/2 month high, correcting further from last month’s contract and 2-1/2 year nearest-futures low. Bullish factors include (1) the weak dollar which may boost US wheat export prospects, and (2) speculation that US winter wheat plantings may drop due to delayed corn and soybean harvests. Bearish factors include (1) the USDA’s Oct 9 hike in its US wheat carry-over estimate to a 9-year high and its hike in its global carry-over estimate, and (2) slack foreign demand for US wheat as US wheat export sales from Jun 1 to Oct 15 are down -17% from a year earlier. Large specs as of Oct 13 sharply reduced their large short position to 20,555. Summary: 2009-10 crop 2.220 bln bu (-11% y/y), US 2009-10 carry-over 864 mln bu (+31.5% y/y) and a 9-year high, global 2009-10 carry-over of 186.73 MT (+12% y/y).

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