Grain Express 9/13/22
Posted: Sept. 13, 2022, 7:19 a.m.
Surprise!
The big surprise for corn in yesterday's USDA report was the reduction in harvested acres. Corn area dropped by roughly 1,000,000 and beans down roughly 580,000. For soybeans, it was the drop in yield, production and new crop ending stocks that launched the market higher. The soybean yield was reported at 50.5, below the low end of estimates. New crop ending stocks came in at 200 million, the average estimate was at 247.
Crop Progress
Yesterday's weekly Crop Progress report showed a 1% decline in good/excellent conditions for both corn and beans. Corn harvest is reported at 5%. Spring wheat is 85% harvested and winter wheat is 10% planted.
Strike
Time is ticking on striking a deal with two labor unions to prevent a walkout of roughly 90,000 rail employees. In a comment to Bloomberg, the National Corn Growers Association VP, Brooke Appleton noted that “Rail is an essential piece of the agricultural supply chain, particularly as we approach harvest season, so any disruption to rail services would have a negative and lasting impact on our growers,” “Given what is at stake for the agricultural community and other sectors of the economy, we hope all parties will come to an agreement.”
Inflation Data
CPI (Consumer Price Index) data, a key inflation indicator will be out at 7:30 AM CT this morning. Expectations are for 8.1%. Tomorrow morning, we will get PPI (producer Price Index) data.
Corn
Corn futures broke out above the top end of the recent range which took prices towards our next line in the sand, the psychologically significant $7.00 handle. If the Bulls are able to chew through and close above this level, we could see an extension to the June 21st gap, 725 3/4-728 1/4. The RSI (relative strength index) is at 67.16, not yet "overbought", but at the upper end of the 4-month range. Previous resistance is now support, that comes in from 682-685.
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Soybeans
Going into the report, we had our bias in bearish territory, looking for a potential fill of the July 26th gap. The market had other plans, slicing through resistance levels with ease, taking the market back above the psychologically significant $15.00 handle. In previous reports we noted that a breakout above our pivot pocket from 1430-1440 would neutralize our bias, so we are back to Neutral. We do have some resistance from the June 30th high near 1508. A move out above there could take the market back to the June 21st gap, 1529 3/4-1536 1/2.
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Wheat
If you're bullish wheat, you were probably disappointed yesterday. Not that there was anything bullish in the report, but the fact that we saw a good pop in corn and a rocket launch in beans you would have thought that wheat would have been the beneficiary of some spillover buying. With that said, the chart still appears to be attempting to carve out a bottom. 900 is psychologically significant ant the 200-day moving average is near 912.
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