BEANS BREAK THEN BOUNCE - USDA PREVIEW

Written By Sebastian Frost

MARKET UPDATE

Futures Prices Close


Overview

Grains end the day mixed. Wheat led us to the downside. Corn saw slight losses. Beans however had the most interesting day. Overnight we were trading nearly a dime lower and actually traded below that key support level of June's $12.56 1/2 lows, as we traded as low as $12.54 1/4 before bouncing well off those lows. As beans managed to close over 17 cents off of it's lows while holding that key support.

Wheat was pressured from the news that Egypt bought some Russian wheat for really cheap. ($10 per ton less than the stated Russian floor. Someone had to okay that, which indicates that Russia has more cheap wheat to sell. The weakness in wheat slightly spread over to corn, as corn is just waiting for the USDA report.

We have the USDA report on Thursday at 10am CT.

The funds are now short the entire ag complex for the first time in 3 years. So the funds are betting short. With this, if they are wrong going into the report, it could result in fireworks if we were to get a bullish surprise. If the report is negative, they will continue to pile on the shorts at least short term.
 

USDA Estimates

The estimates show slightly lower yields from last month.

Corn 🌽 
Estimates: 173.5
Last Report: 173.8
Last Year: 173.3


Beans 🌱 
Estimates: 49.9
Last Report: 50.1
Last Year: 49.5
 

October Report History

In the past 5 years except for 2019 (2019 was stready), this report has seen cuts to production in corn.

Soybean pod counts have been increased each of the past 5 years.

For corn, last year was a non factor. In both 2021 and 2020, this report was the start of a major rally. In 2010, this report started a major reversal from our awful September stocks report.

For beans, last year we saw a big rally, as they cut yield by 0.7 bushels an acre.

Guess we will see what this year holds.

Here are a few ways you can manage your risk heading into the report and how to protect your downside in case we do get a bearish report…….

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In today’s update we go over some ways to manage risk heading into the report. What our downside risk is if we get a bearish report, and everything else you need to know.

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Sebastian Frost
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