Grains Analysis – 11/2/11

November 2, 2011 in Grains by PFG Best

by Tim Hannagan, PFGBEST

1-800-935-6487
thannagan@pfgbest.com

Tim Hannagan is one of the nation’s most prominent grain analysts. His report for Tuesday, November 1:

USDA Reports Update:

The first “demand” report of the week came out October 31; weekly export inspections told us how much of each grain was asked by a U.S. exporter to be inspected by the USDA for shipment to a buyer near term.

Wheat inspections were 20.8 million bushels versus a neutral, 4-week average of 18. We needed 35 million bushels or more to be friendly.

Corn inspections were 27.7 million bushels, down from 29.6 the week prior and 4-week average of 29. We need 40 million to be price bullish. It still appears China’s only nibbling at these prices, just $.15 per bushel off the month’s high and $.80 off the month’s low. China appears to be gambling on another break in prices to buy; however, breaks of any measurable size are on hold ahead of the November 9 USDA monthly crop report, as traders expect a production decline.

Bean inspections were 48.5 million bushels versus 43.9 the week prior and 4-week average of 21. Key world buyer China was in for 36 million versus the four prior weeks’ totals of 32, 4, 15, and 4 million.  We are the sole port of origin for beans now, as harvest winds down, so we’re expecting China to feast on U.S. beans, seasonally. The 48.5 million bushels is the highest weekly number since 48.6 on February 28. Sales are soaring, but we’re running below a year ago as China has been booking South American beans at a better pace for next spring delivery when the harvest is in. Any talk of bad weather in Brazil during November through March 1 and we will see China overbooked U.S. beans as a hedge against Brazil’s output, so we will watch their weather closely now.

The October 31 crop progress report after the close showed 78% of the corn crop was harvested versus a 10-year average of 62%. The only thing to pull out of it was that three of the lowest quality states and potentially lowest yield results came in well under the average.  Results of those poor yields won’t show up on the November 9 USDA crop report, however, tempering pre-report bullishness.

The winter wheat crop is now rated 46% in good to excellent condition, down 1% from the week prior, and one of the lowest ratings in 25 years for this point in time.

Time’s running out. With only five trading days left before the November 9 USDA monthly crop report, find a good buy, if you haven’t already. Find the corn first. Market perception is that if there’s going to be a bullish surprise, it’s in corn; expect short-covering and speculative buying ahead of the report after the weeks lows are in for all the grains.

Technicals:

December corn supports is $6.34 then $6.22. Resistance is $6.68 then $6.80. November beans will find support lying at $11.75 then down to $11.50. Resistance is at $12.40. December wheat support is $6.10, then $6.00 with resistance at $6.70.

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