Corn: Stuck between a rallying soybean market and a lower wheat market was corn. With beans having a good rally, the corn market was able to follow along at first but ended near unchanged. China raised interest rates, which may have put a slight pull on the corn market keeping it from following beans higher.
It is getting tough to think of a reason to be bearish. With March corn once again reaching new contract highs, it reminds us of how hard it was to be bearish last time we saw these levels. At the same time, we need to remember that fund selling came from nowhere last time we saw these levels and that heavy selling was not based on fundamentals.
This is why as we trend higher. We want to look at being buyers as the Jan. 12 report approaches. At the same time, however, we want to have a sell stop down below the market in case another large sell off occurs…Ryan Ettner
Soybeans: Soybeans closed into new contract highs as the market still has its focus on Argentine weather. With light volume, the market was able to jump another 23 1/2 cents and pushed just above our objective of 1375. The major growing areas in Argentina are Santa Fe, Cordoba and Buenos Aires. All three of these regions are dry with little rain potential through the end of the year. Keep in mind the timing of this rally. The crucial time for South American beans is in February and March. That is the flowering and pod fill stages.
This could make for a significant pull back if rains occur, but it could also make for a very explosive market if they don’t. The market attitude is still very bullish and could see a push near 1400 as we move into the New Year. We are still going to look at profit taking as buying opportunities with the idea of fund money staying on the long side after the first of the year…Steve Georgy
Wheat: China finally raised its interest rates over the holiday weekend. This news did not have much of an impact to the market as most market participates had expected them to make this move before the end of the year. The weather is improving in Australia, and that is allowing the country to get back to harvesting. This will temper the wheat weather bulls for awhile.
The trade will be watching the far western Hard Red Wheat areas. The lack of snow cover could cause problems of winter kill. Snow is needed to insulate the crop from the cold, and we have the coldest part of winter still ahead of us.
In other news of interest, the Rogers International Commodity Index will be cutting its CBOT wheat holdings and increasing its holding in rice. Index funds have a set percentage of the portfolio dedicated to each commodity futures contract they follow. Wheat has rallied since the past quarter and now holds a larger than needed portion of their portfolio. In addition to this move, they will add NYSE Liffe milling wheat to their portfolio…Jim McCormick
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.
