Morning Grain Market Research

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Obviously not every combine was parked last week as a little progress was made in harvest. During the week, 5% of the corn crop was knocked out bringing the total to 39% complete and 6% more in beans moving us to 38% complete. This compares with historical norms of 35% and 53% respectively. Obviously, gone are the days of harvesting beans before corn, particularly in a year when there are widespread reports of lodging in corn. The current forecast does appear encouraging for good progress ahead.

The beans market did post a semi-impressive advance yesterday pushing November futures to the highest level traded since the 21stof August. At least part of this was inspired by a record crush of 160.78 million bushels for the month of August but the fact that two cargoes of beans were loaded for China last week certainly did not hurt. As I have pointed out several times, economically it made sense to purchase U.S. beans versus Brazilian despite the tariffs so the bigger obstacle at that point is political. Keep in mind though that total export shipments last week for beans were 20.94 million bushels compared with 54.78 million the same week a year ago. On the brighter side, we are using the port space for corn as inspections totaled 53.2 million bushels versus last year at 22.93 million.

Planting in Brazil continues to move along at a clipper pace as AgRural now estimates that 20% of the bean crop was planted by the end of last week. This is the more rapid pace that have witnessed since they began keeping track. This could mean Brazil will have beans harvested before the end of the year. Full season corn planting now stands at 44% compared with an average pace of 38%. Further south, the Buenos Aires Grain Exchange estimates that 27% of the Argentine corn crop was in the ground as of last week, which is right at an average pace. Soy planting is just getting underway.

African Swine Flu continues to wreak havoc in China as yet another outbreak was reported in the Jaingsu provence. As I have commented previously, we understand the official reports only scratched the surface in regards to the extent of this issue and culling could easily be in the hundreds of thousands. Certainly not a good situation for soy demand but eventually could be a positive for the U.S. pork industry.

Grain and soy trade appears to have settled down a bit this morning which is understandable. We have just squeezed out the lion share of the shorts and there is not a tremendous case just yet for being long. All that said, the action has been solid enough to suggest we have a bottom in place, and with equities looking shaky, I would expect to see investment money begin to swing back to commodities on weakness.

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