Corn: Follow-through selling was seen from last week, finding support just about exactly at the level expected. Once the March corn approached the 420 support area, solid buying came in once again to defend the contract lows.
Outside market influence was mixed Monday with wheat being hit lower once again while soybeans found an active bounce from a positive crush report. There were no overnight sales announced Monday morning, which might have been viewed as a little negative but not enough to take out contract lows. March corn volume was not bad, given the time of year, with 103,672 contracts traded. This higher volume trade shows that corn continues to have strong support, which is better for the bulls than just to say “lack of selling.”
Until the January report, it is hard to see just what news will come out to suggest new three-year lows for this market. On the same scale, even if corn finds a pickup in exports or ethanol demand, it will be tough to break resistance ahead of a January report that could raise yield.
Each year around the holiday time we find a reason for this market to remain sideways, and this is what we are looking at right now. Bulls are looking for fresh overnight sales and another positive ethanol report Wednesday morning. Bears are likely to take profits at current levels but quickly sell bounces always having confidence that the January report will be on their side…Ryan Ettner
Soybeans: The bean market started the final full trading week of the year on a positive note as it erased a portion of last week’s sell off. A positive export inspections number as well as expectations for a bullish NOPA crush number provided the fundamental support for the market.
Weekly soybean inspections came in at an impressive 62.527 million bushels. The trade had anticipated between 52.0 and 58.0 million bushels. Last week’s inspections number came in at 60.43 million bushels. We have now shipped out 765,892,000 bushels of beans so far this marketing year.
As for the November NOPA crush, it came in at 160.45 million bushels, which was just under the 161.3 million bushels guess of the trade. This represents a 2% increase over last year and the September through November crush is now 1.1% under last year. A few more months of a strong crush and we will beat the USDA’s estimate of only a 0.1% increase.
Continued rumors that China might cancel DDG shipments due to unapproved GMO contamination continues to cause concern for the meal market. If China does hinder DDG imports as well as corn then we may have some soymeal price problems as DDGs are an alternative protein source to soymeal. If we are not exporting DDGs, and they are kept here in the United States, then soymeal prices are sharply overvalued. Some in the trade believe that China will import soymeal instead of DDGs due to the GMO problem but we believe this is unlikely. With the Holiday season upon us (this is the last full week of trading for the year) trade volume will be low but market volatility could get high so traders be cautious….Jim McCormick
Wheat: Wheat finished under pressure as trade continues to look at nonthreatening weather for many of the major growing areas. We continue to push for new lows and the March Chicago contract has settled into a new low for the move. After the slight uptrend was broken and we violated the rounding bottom, this market has done nothing but fall.
World markets were also under pressure as London Liffe wheat futures finished lower and Paris wheat finished lower for many of the front month contracts. With world demand staying out of U.S. markets and comparative wheat from other sellers continuing to remain cheaper than the U.S., the fall in wheat prices doesn’t appear it is going to change any time in the future.
Funds are holding the largest short position in wheat since that number has been recorded.