Corn: Corn closed 4 cents lower Monday at 423 1/2 on volume of 50,284, which is somewhat normal for holiday trading. Expect another low volume day. Wheat put pressure on the market as well, closing 8 3/4 lower on the March contract. We continue to be trading in a range with support at 420, light resistance at 435, and stronger resistance at 450.
A tug of war is developing between the bulls who are focusing on the better than expected export numbers reported last week and the bears who are expecting higher production numbers and continued good weather in SA. Good rainfall in key areas along with more rain on the way is definitely not considered bullish…Scott Donarski
Soybeans: Soybeans were under pressure for most of the Monday but managed a slight recovery late in the session so the market was able to close off the sessions lows. Trade volume continues to be light as many trade participants continue to be absent with many taking the next few days off due to the New Years on Wednesday.
On Thursday last week, the soybeans sold off hard coming out of the Christmas break. Then on Friday, the market bounced with the belief that Thursday’s sell off was overdone. With better than anticipated rains falling in Argentina over the weekend, we gave back all of Friday’s corrective bounce and then some. Overall, S.A. weather should be viewed as bearish for prices.
We continue to hear demand chatter with reports that China is shopping around for beans for March Delivery. With exports sales now at 99% of the USDA forecast amount, it seems like a certainty that the USDA will be raising their export sales targets on the Jan. 10 report.
The Rosario exchange in Argentina reported that they estimated that Argentina should harvest a 55 million ton crop this year. This would be a big jump from last year’s 48.3 mmt crop. The exchange attributes the increase in production due to an increase in ground planted to soybeans. About 70% of this year’s crop has been planted to date. At the other end of the spectrum, in Brazil early planted beans are now being harvested. News wires are reporting that harvest has begun in the country’s top producing state of Mato Grosso. This region of Brazil is in the far North of the country. It is the equivalent of Southern Texas harvesting in first half August (two months before the Midwest kicks in). The beans that are being harvested were planted beginning around Sept. 15. The trade still anticipates that Brazil’s total production will top the 90 mmt level this year. We will have a full day of trading today, but there will be no night trade Tuesday and the market will be closed Wednesday and Wednesday night. The markets will reopen on Thursday AM at 8:30 CST…Jim McCormick
Wheat: Wheat finished the day lower again, closing into new lows for the move. The close into new lows negates any sort of bottoming action we saw last week. Weather forecasts have become more favorable, moving forward as we continue to see shorts hold their positions heading into the New Year. We have a regular trading session Tuesday and no trade on Jan. 1 and start trade again on the Jan 2.
Fund positions are going to be important after the first of the year as we could see some leveling and see some shorts cover but right now the trend is down, and we need to continue to follow this trend until we see an event that changes this. We have a USDA report that could create some short covering but we will discuss this later. At this point I wouldn’t enter new short positions but would continue to hold shorts until we see a major reversal pattern.