Corn: To start a new week, the buyers that we have seen in corn had a problem running this market up. Buying over in the bean market added some outside market support but now the corn market is approaching resistance in March of 420. This time, as corn approaches the resistance level, it is doing so with crude far lower than it was the last time we were here. On December 1st, when corn made its last high of 421 1/4 the crude was making highs of 79.04. This time on a bounce in corn, crude is nearly $10 lower than it was making that resistance all the more worth selling from. Current estimates on damage from the winter storm come in between 50 – 100 million bushels. This damage is supportive to the corn market but in the end it has been crude oil which has kept underlying support in this market. Reports we have been hearing is that some producers are back to the harvest, while others still have a good while to wait with some snow drifts as tall as the corn around the headlands. New hedgers should take advantage of current prices right now while those with positions already on can look to build new positions near resistance. Keep in mind you can lock in high prices by selling futures, using options, or selling cash corn. Do not sell cash corn for current delivery (at this wide basis). If you do not use futures or options, sell only for deferred delivery where you capture some of the tightened basis. Looking again at outside market influence, it can be said that crude has been oversold lately. This might bring just enough support into corn to get our hedges put on. Corn did not have good volume buying on Friday’s bounce. It is likely that without support coming from the beans, we would have seen that support disappear today with corn trading lower. If crude puts together a bounce or if beans stay strong then we will be given a chance to hedge once again.
Soybeans: In a reverse of Friday, it was the corn market which followed the bean market today. Some quick buying came into the beans based on strong crush numbers. USDA is looking for a 2% gain in crush this year but current numbers are already showing a pace for 4% gain. This morning’s report, for the month of November, showed a 15% increase! Other news in beans turned out bearish today. Much like corn, the beans may find good resistance at recent levels that have stopped this market. Weather in South America still looks good with dry weather for most of this week without excessive heat which is then followed by good rains late in the week. There was also talk of China releasing some amounts of stocks to help keep prices down for cooking oil as well. There are more reasons for support in this market recently but the window for hedging might not be all that large. China typically starts looking at South American beans some time around mid January. When it comes to hedges, we will need some continued support as the November contract did not follow current months very well today. Jan beans were up 20 on the day, yet November was only 10 higher. This leaves us well short of our target for hedging as just last week November was over 1040 and even after the bounce today it only was able to manage 1028. Upon reaching the 1040 level or slightly higher we will once again look to be aggressive hedgers of beans.
Wheat: Once again affected by outside markets, the wheat was happy to follow along with the row crop bounce today. For the fourth session in a row, the 100 day moving average looks to be a line of support. Wheat has traded down close to this line but has not broken it, making it a good area to buy from. Today this line comes in at 528 in the March. Opportunities have been thin in this market recently trading more calm than it has for quite some time now. This 100 day moving average is looking more like either a level to buy from or to have a “stop in” sell order just below it
Ryan Ettner is a registered broker and grain analyst at Allendale, Inc. in McHenry, IL. Allendale is registered with the CFTC and NFA and is a member of the NIBA. www.allendale-inc.com