Corn: Two things common during holiday trade are volatile movements and support/resistance levels holding. This means that traders feel free to really move this market but tend to shy away from taking out important established levels. Trade of that type was seen well on Monday. March corn did take out top-side resistance by 3/4 of a penny but quickly backed away after doing so.
Support is expected in corn during this dry period in South America as it enters the key silking/pollinating time for corn in those dry areas. While talk may circulate weather is the reason for most of the day’s bounce, it is confusing to see KC wheat with the biggest bounce on Monday and beans the least. Bulls are obviously excited about the move and will quickly attribute the bounce on weather issues. We might be a little slower to jump on the bull bandwagon at least until Monday's bounce is backed up with more buying on Tuesday.
Bears sold at resistance on Monday keeping the breakout above small. If bears do find a turnaround on Tuesday, they also need to be careful expecting a major breakout lower during holiday trade. Expect more volatile trade to continue but we recommend giving every move at least two days before getting too excited either higher or lower at least until January…Ryan Ettner
Soybeans: A gap higher in the beans Sunday night led to lack luster trade through the day on Monday. The talk of South American dryness is what has this market excited near term as the trade continues to talk about production losses.
The trade will point to this lack of production in South America creating more demand for US beans on the global market. Several meteorologists have been debating about whether the La Nina pattern will continue to persist through January and into February which is a more important time frame for the beans. Like most major weather issues the trade is looking at the production side not demand which for beans have not been good this year.
The other factor that can support this market is going to be the funds net position for the beans is short so covering into the end of the year could lead to support this marker. The gap we left on the bean chart will be filled on a pullback to 1130 1/2. If we continue to hold this gap open and could see a close above 1158 1/2 it should start to look very good for the beans and we could see further upside.
Continue to look for light volume holiday trade with January options expiring Friday that could lead to bigger ranges for the grains in the coming days as lighter volume trade could swing these markets around…Cordon Sroka
Wheat: Wheat rode the coattails of corn and soybeans higher on Monday. There really was no fundamental reason for the strength for wheat. We will attribute some of the Monday rally to short covering by the funds as they still are carrying a near record short position. As of Friday’s close the trade was estimating their short position at 47,000 contracts. With the other grains rallying, we would guess some of the short position holders liquidate those positions to lock in profits before years end.
If we looked just at fundamentals today, we would have to call them bearish for wheat as the massive winter storm forming in the southwest will bring beneficial moisture in the form of rain and snow across most of the winter wheat belt. Export inspections came in 15.326 million bushels. This was slightly below last week’s number of 16.781 million bushels.
As for the price outlook for wheat, we look for a choppy to lower bias to this market as the world’s trader’s deal with an abundant supply of wheat. We would recommend not getting overly bearish at this time. With the funds carrying a near record short position we feel we could continue to see bouts of short covering profit taking, like we saw today as we wrap up the years trading…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 Senior Broker/Manager at Allendale, Inc. Allendale is registered with the CFTC and NFA and is a member of the NIBA. www.allendale-inc.com.