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

SOYBEANS—Jan soybean prices slipped to a 1-month low. The main bearish factor was the USDA’s Nov 10 hike in its US soybean production estimate to a record 3.319 bln bu, up from an Oct estimate of 3.25 bln,  and its hike in its US and global soybean carryover estimates. Bullish factors include (1) harvest delays that threaten yields with only 75% of the US soybean crop harvested as of Nov 8, below the 5-yr avg of 92%, and (2) strong foreign demand as US soybean export sales are up +55% y/y for the marketing year beginning Sep 1. As of Nov 3, large specs added to a large long position of 91,472. Soybean summary: 2009-10 crop 3.319 bln bu (+12% y/y), 2009-10 US carry-over of 270 mln bu (+96% y/y), 2009-10 global carry-over of 57.49 MMT (+35.4% y/y).

CORN—Dec corn prices rose to a 2-week high, modestly below last month’s 4-1/2 month high, which was a correction from September’s contract low. Bullish factors include (1) the USDA’s Nov 10 cut in its US corn production estimate along with cuts in its US and global carry-over estimates, and (2) record harvest delays that may reduce corn yields with only 37% of the US corn crop harvested as of Nov 8, well below the 5-yr avg of 82%. Limiting price gains is the fact that the USDA’s 2009 US corn production estimate of 12.921 bln bu. is still the second biggest US corn crop on record. Large specs as of Nov 3 added to a large  long position of 171,606. Summary: 2009-10 crop 12.921 bln bu (+6.8% y/y), US 2009-10 carryover 1.625  mln bu (-2.9% y/y), global 2009-10 carry-over 132.41 MMT (-9.3% y/y).

WHEAT—Dec wheat prices are trading sideways in a 3-month $1.25 range, moderately above September’s 2-1/2 yr nearest-futures low. Bearish factors include (1) the USDA’s Nov 10 hike in its US and global wheat carry-over estimates, 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 rising corn prices may boost wheat demand as an alternative to corn for animal feed, and (2) the weak dollar which may boost US wheat export prospects. Large specs as of Nov 3 added to their moderate short position of 22,532. Summary: 2009-10 crop 2.216 bln bu (-11% y/y), US 2009-10 carry-over 885 mln bu (+34.7% y/y) and a 9-year high, global 2009-10 carry-over of 188.28 MT (+14.3% y/y).

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