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

SOYBEANS—Jan soybean prices rallied to a 3-month high. Bullish factors include (1) the weak dollar which prompts commodity buying in general and boosts export demand, and (2) strong foreign demand as US soybean exports are up +24% y/y for the marketing year beginning Sep 1. 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 carry-over estimates. As of Nov 9, large specs reduced their large long position to 77,474. Soybean summary: 2009-10 crop 3.319 bln bu (+12% y/y), 2009-10 US carryover of 270 mln bu (+96% y/y), 2009-10 global carry-over of 57.49 MMT (+35.4% y/y).

CORN—Dec corn prices climbed to a 3-week high, just below last month’s 5-month high. Bullish factors include (1) record harvest delays that may reduce corn yields with only 54% of the US corn crop harvested as of Nov 15, well below the 5-yr avg of 89%, and (2) the USDA’s Nov 10 cut in its US corn production estimate along with cuts in its US and global carry-over estimates. Undercutting corn prices 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 9 added to a large long position of 174,572. 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 rallied to a 5-month high, moving higher from September’s 2-1/2 yr nearest-futures low. Bullish factors include (1) speculation that feed mills may switch to wheat from corn after vomitoxins were found in some US corn harvests, and (2) the weak dollar which may boost US wheat  export prospects. 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 exports from Jun 1 to Nov 12 are down -33% y/y. Large specs as of Nov 9 added to their moderate short position of 24,292. 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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