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

SOYBEANS—Jan soybean prices are consolidating modestly below last month’s 2-month high. Bullish factors include (1) harvest delays that threaten soybean yields with only 51% of the US soybean crop harvested as of Nov 1, well below the 5-yr avg of 87%, (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 +55% 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 27, large specs added to a large long position of 74,465. 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 carryover of 54.79 MMT (+30.3% y/y).

CORN—Dec corn prices are holding modestly below their recent 4-1/2 month high, which was a correction from September’s contract low. Bullish factors include (1) harvest delays that may reduce corn yields with only 25% of the US corn crop harvested as of Nov 1, well below the 5-yr avg of 71%, 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 27 added to a large long position of 160,870. 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 are holding moderately above September’s 2-1/2 yr nearest-futures low. Bearish factors include (1) the USDA’s Oct 9 hike in its US wheat carry-over estimate to a 9-yr 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 29 are down -30% y/y. Bullish factors include (1) speculation that US winter wheat plantings may drop due to delayed corn and soybean harvests, and (2) the weak dollar which may boost  US wheat export prospects. Large specs as of Oct 27 increased their moderate short position to 18,645. 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

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