Chuck Penner

Production estimates in the USDA's October supply/demand report were mainly in line with what traders were expecting, but the report raised some questions about grain and oilseed demand.

"I think the market is having some issues and questions about how much the demand is expected to go down," says Chuck Penner of LeftField Commodity Research. "They're trying to figure out why, if prices have fallen off, why hasn't that encouraged demand. Instead the USDA seemed to reduce demand numbers."

"It's on the export side especially. Things like ethanol production aren't all that different from what was expected," he says, noting some of the uncertainty might be related to China's approach to the market. "The concern about China is that they've been buying some big supplies and putting them into their warehouses. So if they're building up those stocks, at some point that means they'll probably also cut back on their future purchases, so maybe that's what the USDA was looking at."

Penner says he expects the market will be "flat to maybe a little bit softer" heading into winter.

"I'm fairly cautious about more upside in this market. Some of the fundamentals could provide some support, that would be related largely to what goes on in South America," he says. "It would really take some threats there to add gas to the market right now."