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BRIAN HOOPS

By Staff | Sep 10, 2010

CORN

August was a bullish month for corn prices as corn closed the month with $.32 1/2 cent gains. Analytical firm Informa Economics forecast the 2010 U.S. corn crop at 13.349 billion bushels, reflecting an average yield of 164.8 bushels per acre.

In August, Informa forecast corn production at 13.448 billion bushels with an average yield of 166 bpa. USDA is currently estimating the U.S. corn crop at 13.365 billion bushels, with a yield of 165 bpa.

The USDA will provide traders with the next glimpse of market information on Sept. 10 with the monthly supply/demand data. The trade will be looking for the USDA to slightly decrease its production figure due to declining crop condition ratings during the month of August and early harvest results that indicate the 2010 crop is not as good as the 2009 corn crop.

The USDA should be conservative with its estimate as it will most likely wait until more yield data comes in prior to making a major adjustment to crop estimates.

From the demand side, look for the USDA to leave ethanol and feed usage unchanged while slightly increasing exports. This will create slightly smaller ending stocks for corn. Corn prices could dip on profit-taking ahead of the USDA supply/demand report as traders will be scared of losing profits on long positions due to a surprise from the USDA.

Barring a major surprise, look for prices to rally into the end of the month as well as taking price direction from impending harvest results.

SOYBEANS

August was a bullish month for soybean prices as soybeans closed the month with $.05 cent gains. Informa pegged this year’s U.S. soy harvest at 3.437 billion bushels, with an average yield of 44.1 bpa.

The firm pegged soybean output at 3.389 billion bushels and a yield of 43.5 bpa. USDA is currently estimating the U.S. soybean crop at 3.433 billion bushels, with an average yield of 44.0 bpa.

The USDA will provide traders with the next glimpse of market information on Sept. 10 with the monthly supply/demand data.

The trade will be looking for the USDA to slightly decrease its production figure due to declining crop condition ratings during the month of August and early harvest results that indicate the 2010 crop is not as good as the 2009 soybean crop.

From the demand side, look for the USDA to leave crush mill usage unchanged while slightly increasing exports. This will create slightly smaller ending stocks for soybeans. Soybean prices could dip on profit-taking ahead of the USDA supply/demand report as traders will be scared of losing profits on long positions due to a surprise from the USDA.

WHEAT

August was a bearish month for wheat prices as Chicago closed the month with $.07 cent losses. Wheat continues to find price direction from world demand news as the world slowly shifts its buying interest to the U.S. as there are very few exporting countries to compete with the United States.

Long term highs look to be in place, leaving volatile prices during September. Winter wheat seeding beings in the last half of the month and producers will be hedging price risk in the deferred futures.

Brian Hoops is president and senior market analyst of Midwest Market Solutions Inc. Midwest Market Solutions is a full-service commodity brokerage and marketing advisory service, clearing through R.J. O’Brien.

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