DEC CORN

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Who saw that coming? 168 BPA from the Pro Farmer Tour!! A whopping 7 BPA under the USDA Aug Estimate! Conventional wisdom said the Eastern yields would compensate for the below-average Western yields but it didn’t happen! Now, the $64 question is “will the Sept WASDE corroborate the PF #’s”? In addition, the crop ratings issued Mon at 3 pm dropped the gd/ex another 1% to 54% – the lowest in 10 years for the current date! These stats coupled with production losses in Europe & China reinforce a strong bullish case for corn! But with the end-of-month Wed & harvest soon, the expected profit-taking is underway today!

NOV BEANS

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Contrary to the Corn’s bullish #’s, August rains have enhanced the bean yield from Pro Farmer to a 51.7 (USDA – 51.9) – establishing the bean complex as the bearish component of the grain complex! As well, the gd/ex crop rating Mon came in unchanged at 57% while the trade was expecting lower! This yield might translate to a record crop! As well, macro concerns are weighing on the beans! Fed Chairman Jerome Powell last Friday issued some quite hawkish remarks – saying he would aggressively attack 40-year high inflation by continuing to ratchet up IR’s – regardless of the short-term discomfort! This has forced a sharp 1500-point 3-day plummet in the DJI! A negative for all mkts! As well, the US Dollar has reached a 20 yr high – plus harvest is right around the corner! So there are substantial headwinds facing the bean mkt going forward!

DEC WHT

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After a false break-out on the downside, Dec Wht did a “180” rallying a full $1.00 & temporarily breaking out upside before month-end profit-taking forced the mkt back into its congestion area! Fundamentally, improving spring wht crop conditions, a larger than expected Canadian crop & a sizeable Australian crop all contributed bearishness to the mkt correction! Dec Wht will receive solid spill-over support from Dec Corn – the clearly bullish Stalwart of the CBOT!

OCT CAT

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Weaker cash & cheaper corn have fueled a downslide in futures – as well, global macro concerns about rising inflation & interest rates have muted demand potential! However, traders see tightening supply into the 4^th Qtr & lower-than-average lower weights – both suggesting short-term production won’t be as high as expected! So the current correction may crater out soon!

OCT HOGS

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The mkt action is clearly skewed by the extreme discount in the price structure! For instance, Dec Hogs are $28 discount to cash while the average is $11! So much of the bearish & cash news has already been dialed in!! Plus, 4^th Qtr production is expected to bw down 1.5% from a year ago! So, the Aug lows may hold – barring a major economic collapse!

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