Grain Spreads: Rapid Harvest

Barchart · 10/16 15:26

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Commentary

Beans continue to push lower on two fronts. First, forecasts for Brazil below still show impressive rains in Mato Grosso and Northern growing areas near term as models show widespread coverage the next 15 days. So, in my view the weather premium that prompted the sizable trend and index following fund short covering in September on hot/dry weather now shows managed money re-entering short bets on a wetter pattern in my opinion. Second, in the US, soybean harvest now sits at 67% complete, a massive 16% ahead of the previous 5-year average pace, with corn harvest at 47% complete, 8% ahead of the average pace. These were both ahead of market expectations, with the dry weather throughout almost the entire country in the last week helping speed things along. Forecasts remain dry through the remainder of this week as well, meaning we should see another big jump on next Monday’s report. The rapid harvest pace, combined with record yields for many, is in my view continuing to push the limits of storage capacity in the Midwest on the front-end. We are at a key area technically for November beans at 980. We start to move under this level, the markets next target near term is 972, (25%) down for year, and then the next set of trendlines of key support at 949/953. A close under here and its 908/909, bottom edge of Bollinger band and 30% down for year. Resistance is 10.03 to 10.10. A close and its 10.38 and then way up to 10.66. 

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Sean Lusk

Vice President Commercial Hedging Division

Walsh Trading

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On the date of publication, Sean Lusk did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.