On The Money Grain Commentary 9-11-14

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Corn Outlook:

Expectations for a monster corn crop grow each day.  USDA thinks so as well, as they raised their yield estimate to 171.7 bpa from 167.4 bpa last month.  Production is forecast at 14.395 BB with 2014-15 ending stocks at 2.002 BB.  World stocks rose to 189.9 million tons, an increase of 2.1 million tons from last month.  Any way that you slice it, it is going to take some time to go through the record supply of corn.  One silver lining, however, is that the USDA may not be as aggressive in raising their yield estimate in October.  In other developments, since mid August, the trend following funds have been flip flopping between a long and a short position.  Last week, the flipped again and are currently long 60 MB.  However, do not be surprised to see them flip to a short position again based upon the bearish report.

Bean Outlook:

      While concerns of frost always arise at this time of the season, the market does not seem overly concerned.  Although a cool down is expected, any damaging frost the upper Midwest will likely be minimal.  Expectations for a record crop continue to grow as the USDA has increased their soybean yield estimate to 46.6 bpa from 46.2 bpa in August.  Production is forecast at 3.913 BB with 2014-14 ending stocks at 475 MB.  World ending stock are projected at 90.1 million tons, an increase of 5.2 percent from last month.  In other developments, the trend following funds have increased their short position to a record 350 MB.  It may take a crop issue to develop in South America this fall and winter before they abandon their shorts.

Wheat Outlook:

Wheat is struggling from increased global stocks, competition from the Black Sea region, and the easing of tensions between Russia and Ukraine.  Wet conditions in the upper Midwest has slowed spring wheat harvest, which is 58 percent done compared to the average of 78 percent.    However, the delay has offered little support.  Meanwhile, the USDA has done no favors for the wheat market as they increased their 2014-15 ending stocks to 698 MB from 663 MB.  World stocks are expected to rise 3.3 million tons to 196.3 million.  In other developments, the short position of the trend following funds has risen slightly to 345 MB.

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