Corn traders are somewhat confused as very large early yields are starting to be countered by less-than-expected yields in several key growing regions. Producers who were hoping for 180s are now talking 160s. I think this just confirms what crop-tour participants were reporting several weeks back: EXTREME variance! Many bulls continue to think the USDA is being overly optimistic in regard to "total production." Estimates of a 13.8-billion-bushel crop is hard for many to swallow when you consider the WASDE made very little downward changes in the Illinois, Iowa, Minnesota and Wisconsin estimates.
Soybean bulls continue pointing towards lower yields, lower harvested acres and stronger-than-anticipated exports. The problem is: early yields are coming in better than many producers were thinking a couple of weeks back. Exports remain strong, as reports now show soybean sales already totaling more than 60% of the USDA's target just two weeks into the marketing year. The 10-year average is less than 35% by this time frame.
The concern is that sales will start to immediately dry-up as South American suppliers simply become much more competitive in early 2014. Our only saving grace right now is the fact the U.S. dollar has fallen by about 10% in comparison to the Brazilian real in the past 30 days. Technical traders are eager to see what happens now that a glaring chart gap between 13.31^6 and $13.35 in the NOV13 contract has been officially filled.