Corn: This week begins the lower volume trade that is expected to last until the end of the year. It is during this time that smaller speculators tend to control the market and those traders have a strong Friday close to continue the trend. Seeing light fund buying on Friday in the corn gives every reason for the smaller speculators to keep the trend going.
What we need to remember this week is that gains could be easy come, easy go. Once again, the March corn placed a high that is right in line with the top of the channel line. These recent highs have done a great job of trading right up to technical expectations and keeping within the channel. During the week, we should look for choppy trade but in the end, without any changes to fundamentals, the corn looks to continue the slow grind higher.
Of course we need to remember that China claimed it would increase its interest rates by the end of the year. There have not been any new rumors lately about when it will happen, but it is obvious time is running out before the end of the year. If choppy trade brings about a good size setback, we want to make sure not to get too bearish.
March can stand a slide back down as far as 580 without changing the bullish uptrend. Should choppy trade give a pullback to that level, it can be seen as a buy with a close risk point. Thursday will hold the only reports, which could cause grain fundamentals to change slightly and neither is likely to suggest actual balance sheet changes. This leaves the uptrend unthreatened by foreseeable reports…Ryan Ettner
Soybeans: Soybeans closed strong on Monday. We could continue to see this buying for the next several days. The January contract closed above last week’s highs and above 1300 to start the week. This is the highest close in nearly six weeks. Most of the buying came from concerns of Argentina’s weather remaining dry.
Traders are also looking at new money to pour into these markets after the New Year. Any solid breaks should be bought with a target of 1375 on the March contract. It looks like trading funds continue to build their positions and are currently long almost 155,000 contracts.
Trade volume should remain light as we move into the Holiday weekend. We feel a retest of the recent highs could find some profit taking this week but the charts are still friendly and pointing higher. No major fundamental news to talk about but continue to watch the dollar and outside markets for early direction…Steve Georgy
Wheat: The market started the holiday trade on a bullish note Monday, despite that there wasn’t any new news to trade. After last week’s sell-off, bargain hunters were out in force. Intercommodity spread traders were also at work today. The corn-wheat spread trade also was due for a correction. The corn had gained 70 cents on the wheat the past few weeks.
Weather around the world still has the trade concerned. The United States still has problems with the drought in the far western hard wheat belt. The Australians have caught a break with the rain and are getting some dryer weather. The quality of the crop is still a concern, though. China is also dealing with cold weather and dryness issues.
In other news, Russia indicated it might extend its exports band past July 1, due to fertilizer shortages negatively impacting yield potential.
Ryan Ettner is a registered commodities broker and grains analyst at Allendale, Inc. Steve Georgy is a Sr. Broker/Manager at Allendale, Inc. Jim McCormick is a Sr. Broker at Allendale, Inc. Allendale is registered with the CFTC and NFA and is a member of the NIBA. www.allendale-inc.com.
