Corn and soybean futures finished Monday’s session higher (near session highs for both). Traders were focused on a smaller rally, which lead to the covering of short positions, particularly on beans. In overnight activity, both corn and beans started strong, then weakened to lower levels. Crude is down, while the USD strengthened.   A wetter pattern is developing in parts of the western US grains belt, triggering delays over areas that have not yet been harvested. This poor harvest weather will contribute to further reductions in yield potential for the corn crop, a factor not yet accounted for in USDA yield estimates.   Given the short term outlook, we expect price support for corn and beans this week into next.

WTI yield estimates this week have not changed from the previous letter: corn at 140.9 -142 bu/acre, and soybeans still at 38.5-40 bu/acre (18 major growing states).

Dryness in NSW has lead to estimates of the Australian wheat crop to be reduced (Australian Crop Forecasters). ACF is putting wheat at 20 mmt, down from 21mmt. According to ProFarmer, most private estimates are ranging between 20 and 23.6 mmt; AUS gov’t estimate at 22.5 mmt.  Despite reductions in crude futures, palm oil futures have strengthened, signaling that the perceived demand from the biofuel sector will remain strong. Tight global stocks should keep this market constructive into next year.

This entry was posted on Tuesday, October 21st, 2008 at 10:22 am and is filed under Agriculture, Biofuels, Global Commodities, Global Weather, Grains, United States. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.