Corn: With all the pre-selling going into Friday’s report, some type of a bounce was expected. First resistance on the December chart was 436-1/4, which was the first target for buyers and they quickly hit that level Monday.
Now we have seen heavy selling going into the report followed by some buying back after. This is the point where the corn market can finally trade sideways. Bulls have been buying fresh 37-month lows for over a week and with the sellers quiet today, buyers were able to hit first resistance.
Now the question is: Just how far can this market be pushed higher? Friday’s 1.89 billion bushel carryout allows for a bounce but is far from suggesting a longer term rally can be seen. Early thoughts post report is that there is a little for both the corn bulls and bears right now to provide a trading range…Ryan Ettner
Soybeans: With the report out and the government closed in honor of Veterans Day, news to trade Monday was limited. Early in the session, beans were under pressure as unwinding of the short corn/long bean spread dominated the trade. Coming into Monday, the trade was estimating that funds were short 191,500 corn contracts and long 131,900 contracts. With the November report out of the way, some in trade no doubt were in the mood to book some profits.
Late in the session, the bean market did come back and was able to close on the plus side. Looking at Friday’s report, it still looks like the USDA is underestimating demand. On the report they raised exports 80 million bushels and raised the crush 30 million bushels and we do not think that this is enough. With the crush margins so strong, we would look for the crush number to be increased 10 to 20 million bushels on upcoming reports.
As for exports, we think they will have to be bumped up at least another 25 million bushels. As of last week, the United States has sold 84% of anticipated export sales goal. The five-year sales pace for export sales is 60% sold. This 84% sold figure includes the 80 million bushel jump in demand on Friday.
Weather in South American looks great and suggests that their crop will only get bigger if this good weather can be sustained. It is estimated that about 59% of their bean crop has been planted. The Brazil government is estimating the crop will fall in the 87.9 to 90.2 mmt range. Last year’s crop totaled 81.5 mmt. With the USDA report out of the way, and the next WASDE report a month out, we would look for a more sideways action in the bean market near term.
With the weather looking so good in South America, we are hesitant to chase the market over the $13 level, but with the strong demand we have been seeing we would think dips will find support.
On this Veterans Day, I would like to thank all of you who served our country. Thank you and best wishes…Jim McCormick.
- Prices for Russian wheat rose for the fifth week as concern over a stretch of bad weather could damage crops.
- EU wheat traded higher on strong Algerian demand and rains slowing plantings in growing areas.
- The commitment of traders report on Friday showed the managed money shorts exited their positions and now hold about 19,000 contracts short.
- Lebanon tenders to buy 40,000 tonnes of wheat.
- Last week’s finish for wheat was the the third consecutive week of declining prices in Chicago.
- USDA expectations for ending stocks of wheat were higher than most estimates.
- We had follow through selling today as wheat was the only grain to finish lower…Cordon Sroka