The Grain Report - REPORTS SPLIT

REPORTS SPLIT............... The USDA monthly crop report had one surprise. That was the bean production number. After the USDA lowered weekly their crop condition reports by 4% for the month of August, they did a turnaround and raised production from the months prior by 29 million bushels to 3.085 billion bushels versus 3.056 last month and 3.329 in 2010. This raised ending stocks to be left over next year to 165 m.b. versus 155 the month prior. It may seem to small a change to notice but the trade had expected production at 3.025 and ending stocks 152 all lower than the August report. This had beans $.30 lower on the close as traders who bet on a lower numbers across-the-board sold out. Of course all the talk is how did conditions decline in August and production and yields increase. This sets up the October report for a possible revision and much speculation. Corn production came in as we expected at 12.497 b.b. down 417 m.b. from the August report of 12.914. Yield dropped from 153 bushels per acre in August to 148.1. Carryover or ending stocks dropped marginally by 42 m.b. to 672 m.b, versus 714 last month and 870 on the July report. They did just what we told you they would do on my reports last week and lowered feed usage, exports and ethanol usage. Nobody in the industry believes anything other than higher ethanol and exports lie ahead into 2012 but as I noted if they didn't play a shell game on usage figures, this report would have put ending stocks at 297 m.b. and had they not lowered usage on last months report ending stocks would be minus 259 m.b.. Well, the government cant set that kind of panic price rationing in motion knowing a two or three dollar rally would have a dramatic inflationary impact for meat, energy and corn sweeteners for food processing. Their hope here is a slow and steady feed of historically bullish grain fundamentals will control wild price swings and keep markets manageable giving commercial end-users of corn time to make adjustments with hedges and secure inventories. One of the patterns to make know of and watches past report responses. The July report put production at 13.470 b.b. and ending stocks 870 m.b.. Corn rallied from 6.38 to 7.10 in seven trading days. The August 11 report put production at 12.914 down 556 m.b. and ending stocks at 714 m.b. down 156 m.b. from the months prior and corn rallied from 6.88 to 7.80 in 12 trading days. Here we are with the September 12 report production at 12.497 b.b. down 417 m.b. with ending stocks only down 52 m.b., what might be the rally here. Certainly everyone will expect lower numbers on October report but too will they expect the government to be again less forthcoming. Stay tuned. After the clothes our crop condition reports came out. Corn came in at 53% good to excellent condition, up 1%. The increase came off improvements in Iowa up 2% percent at 57% good to excellent, Nebraska, up 1% at 76%, Ohio up 3% at 57%. Key producers unchanged on the week were Illinois, Indiana and Wisconsin. 84% of the crop is in the final dented stage. WXRISK.COM the weather site sees a Frost Wednesday and Thursday in all of North and South Dakota at 68% and 79% dented, Minnesota 83%, Michigan 61% and Wisconsin 66% planted. There could be significantly quality damage here. Soybean condition came in unchanged at 56% good to excellent condition. Only note of mention is Illinois down 4% at 44% good to excellent. Like corn beans to look for a potential quality condition hit off this potential Frost threat midweek. Oh boy, here we go, our first crop progress report for the new year winter wheat crop. It showed 6% of the crop is planted versus the ten year average of 10%. Key producers currently under a severe drought threatening planting were Kansas at 3% planted versus the ten year average of 4%, Oklahoma 1% versus 8% and Texas 2% seeded versus 9%. The rule of thumb is 50% is planted by months end and done by mid-October with perfect planting weather. On October 18 last year we were 80% seeded under dry conditions. There's a chance for some rain in Oklahoma and northern Texas next Monday and Tuesday. But it looks like small coverage under 1 inch. There continues much talk that many growers will not plant until rains returned but theres time yet. Panic sets in after October 10. Technicals after the close of trade Monday read like this. December corn support is 7.34. A close under sets up 7.06. Resistance is 7.56 then 7.64. November beans support is 13.82 resistance at 14.30. December wheat support is 7.25 then 6.85. Resistance is 7.55

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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