Corn: All eyes were on the expectations for fund rebalancing after the first of the year. Today saw some front running ahead of the potential for fund buying. Corn started strong as the other grains did but was slightly more limited to its upside potential due to being close to the upper end of its range. Our high today, in the March, was 418 3/4 stopping just shy of our well known resistance of 420. Front-running buyers are unlikely to go too far with their buying unless the funds show up to help out. That is understandable because no one wants to be left holding the bag with a buy at 425 and have the funds actually not buy after the first of the year. Should that buying not surface there would be large amounts of disappointment selling. That selling would push corn back at least to recent support of 380. Here is the issue that we face: Do we take what was given today and put on some hedges or do we wait to sell if these funds show up? There is no argument that the amount of fund buying expected would certainly push us to new recent highs. If you do not have many sales committed for next year then putting on some hedges here is a level you just can’t argue with. If you already have a fair amount of hedges on, then we can say it may be worth waiting to see if the funds help us out to start next year. We can expect another week of thin trade that is volatile. It may be tough to break 420 this week, so if your goal is for higher levels than that, you will need the funds to help out. If funds start next year with active buying, we will be more than happy to take full advantage of it but we have to take some advantage of what is in our hands now. How often do these funds actually do exactly what we expect them to anyway? In other news we will point out USDA did not release a new harvest estimate this afternoon. They are done for the season. As of last Sunday the 20th, a little over 600,000 bushels were left in the field by our estimates.
Soybeans: Unlike the corn, beans have far more potential to the upside. That allowed buying to step in and move this market with little resistance today. Volume in March was 48,000, which is thin but not drastically so. With the anticipation of fund buying in this market after the first and resistance not being found until 1070, selling was light and buyers took over. Each time a buying wave moved in this light volume market it was able to provide more push than normal. There is still some carryover support from strong exports last week but it should be more than obvious that most of this was technical buying. We are interested in hedging beans but feel like there is even more potential for a move higher. Today, the beans showed why you just can’t turn your back on a thin traded market. Fund buying is not expected to be quite as aggressive in the beans as it is for corn leaving us quicker to place hedges once this market does approach resistance. Weather in South America still looks to call for regular good rains which continue to increase expectations of production. We will look for at least another 30 cents in the bean market before hedging. That just might happen quicker than earlier thought. There could be enough buying in thin volume to reach that objective by the end of the week.
Wheat: In a day that saw heavy speculative buying, it should not be very surprising to see wheat move almost more than any other grain. Until the end of the day it was out in front of the row crops. As we have said before, fundamentals have nothing to do with recent trading and will also be subject to the greatest percentage move from New Year fund buying if it is to show up. Any trade in this highly speculative and easily influenced market will entail some risk but as seen today, high risk often leads to high reward. Stay cautious with trades in this market. Any orders entered here are at the mercy of fund influence. This is as unpredictable as the weather.
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