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On the Grains:
Grain prices are still soft, but steadying in overnight trade thus far. Yesterday started off shaky at 7:30 with weekly export sales that were so-so at best. Corn sales were in the upper half of the range of estimates but wheat and soybeans sales fell in the lower half of the range. Then before the day session even started, there were two big flash sales of soybeans to the tune of 1.7 million tons with the bulk to China and the rest to “unknown destinations” (which usually turns out to be China).
Markets didn’t respond much, because traders had spent several days “positioning” for the WASDE report due at 11 a.m. Both corn and soybean yields came in above expectations, particularly corn. In turn, ending stocks came in above average expectations. We had all the details in yesterday’s PM report so I won’t repeat here.
The biggest surprise to me was that USDA didn’t drop its estimates for Brazilian corn or soybean crops at all from October. I had said yesterday that those estimates might be a “bullish sleeper” in the report because we’ve been talking nothing but adverse weather for Brazil the entire month with Brazilian traders already cutting their production estimates and USDA didn’t even acknowledge their weather woes. Thus, their numbers were a “sleeper” alright, but turned out to be a b-e-a-r-i-s-h sleeper instead.
I see yesterday’s bearish reactions overdone. In fact, even USDA number crunchers would agree, since even though they cut their average farm price for corn by a dime (to $4.85), December corn futures are already nearly 20 cents below that. The small boost to soybean ending stocks raised them only to a 21-day supply from a 19-day supply when a 30-day supply is considered minimum pipeline requirements. They didn’t even change their estimate for average farm price and left it at 12.90.

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