U.S. export sales of corn in the week ended Nov. 22 tumbled 69% to 263,140 metric tons from a week earlier, the Department of Agriculture said today. Thus, the corn market is down slightly today, 7¢ for December contract. The rest of the grain complex has stronger losses with front month soybeans down 17¢ and soybean meal down 11¢. Wheat futures are down 21¢.
The biggest losers today in the commodities markets are coffee and silver. Coffee is down 3.87% and silver is down 2%. It is starting to be clear that consumer demand based, “risk-on” markets are being sold due to concern that the fiscal cliff might not be resolved. The U.S. bond market has seen fairly quiet trading as it is unclear what a breakdown in the fiscal cliff negotiations would mean for bonds.
The 30 year bond futures are still below their highs of November 2012. We hear talk of a Bond bubble among investors, but it’s tough to pick a top, especially with the Fed so heavily involved in U.S. interest rate pricing.
Despite today’s price action, we think corn futures have a legitimate case for another run higher, but there certainly are obstacles. The main obstacles to another run higher are: Fiscal cliff not being resolved and further Euro deterioration. There are major global demand issues that will be negatively affected by either one of the two obstacles turning out negatively. For now, corn has been consolidating between $7.20 and $7.70 since September. It is still above a multi-month uptrend line, and above a key pivot point of $6.80.