Corn Fundamental Support
After Friday saw a late session correction, some spill over correction was seen Monday as well. March is now the lead contract and today's correction came within three cents of contract lows before finding better support. There wasn't much news today to cause the setback but more of a lack of support that was being seen last week leading into option expiration. There may have been some in trade fearing that this afternoons commitment of traders might show funds at a new record short even though there was some speculation they may have actually covered a few short positions.
As fundamental news goes there isn't much to talk about. For the demand side, we saw slightly disappointing exports but also an all-time record ethanol production report. Before bears get too excited it is worth knowing that going back to 1994 the USDA has never changed corn production numbers on the December report. If trade is expecting bearish news from the USDA they will have to wait for the January report to see any chance at a production increase.
Monday's drift lower still looks more like some recent buyers moving back to the sidelines. If contract lows are taken out it would then look much more like new active sellers in this market. Short term the COT report data may direct corn for the first half of the week while ethanol and export reports will guide leading into the end of the week...
Bulls: If the COT report this afternoon shows any fund short covering bulls can look to buy at current levels close to contract lows
With all other news neutral buyers can step in at any level close to contract lows knowing risk will be limited at that buying point
Smaller speculators will likely turn to buying if any sign of even light fund short covering is seen
Bears: Bears can continue to expect small setbacks in this market if all other news remains quiet but be cautious looking for a move to new contract lows
If the COT report shows fund short covering sellers will want to be very cautious to only sell bounces and not chase this market lower to where funds could cover more shorts again
Soybean Fundamental Support
The bean market found some support today as dryness concerns in Argentina kept a bid under the market. Reports that China has some additional bean purchases for December delivery added to the days positive tone. The rally did stall out at the long-term downtrend line. When that technical resistance wasn’t able to be taken out, some light profit taking set in. A close above this downtrend line which crossed at $10.02-½ would be technically bullish.
The wheat and corn market were under pressure all session long and that was an additional drag on today’s rally attempt. Monday's weekly export inspections came in at 1.579 mmt. This was within the trades expected range of 1.5 to 1.8 mmt. This week’s inspections were down dramatically from last week’s 2,276 mmt shipments. We hope this week’s poor shipments were an outlier and not the start of a trend. Shipments tend to drop off this time of year but usually not as hard as we saw this week. Cumulative exports of 768 million bushels are down 14% compared to last year’s 889 million bushels pace. With exports anticipated to be up 3.5% compared to last year, we will have to ship 15% more each week this year compared to last year to meet the goal. This means we will need to ship a record 35.6 million bushels a week which could be a stretch.
We are in the time of year profits tend to be booked and farmers tend to not be too aggressive hedging which should keep the market choppy. Keep an eye on the South American forecast. If Argentina continues to trend dry into December look for the market to find support on breaks.