While last year’s South American weather problems were much more harmful to corn, we continue the tradition of trading this as a soybean problem. Soybeans broke 50 cents last week on good weather in Argentina and rallied 25 cents on Tuesday, Dec. 27, on dry weather for northeastern Brazil. Reports of record yields in Mato Grosso, Goias and Parana were ignored yesterday, but embraced today. As always, news follows price.
The month of November proved to be a very interesting month for agricultural commodities. After starting with a traditional focus on the U.S. harvest and the record yields in corn and soybeans, our markets were impacted mid-month by a Chinese speculative buying frenzy and late month by the combination of the EPA’s increased biofuels mandate, the USDA’s 10-year Baseline projections, and OPEC’s agreement to cut production by 1.2 million barrels per day.
Soybeans continued their march higher as they closed higher for a 7th consecutive session. The Chinese market as well as the Malaysian palm market closed higher last night giving market bull’s early momentum.
Soybeans began the week like they ended last week, on a volatile note as January traded a 14-½ cent range. Weakness was attributed to a continuing run up in the U.S. dollar and a weaker Chinese market. The U.S. dollar continues to see strength as the rest of the world currencies are under pressure and the bond market continues to fall apart which is pushing money to the United States. The Chinese soybean market was down another 5% overnight after dropping 4% on Friday.
There was little doubt at all fund buying was seen in the corn on Monday. Now the next question should be: Is this just a one day buy to start a new month and new quarter or if this is going to be a longer term short covering event for the funds?
In the overnight electronic session the December corn is currently trading at 330-¾ ,which is ¾ of a cent higher. The trading range has been 331-¾ to 329-¼. Weather remains a huge factor as we head further into harvest when we worry about forecasts of frosts and Indian Summer. After Monday’s USDA data we are all talking about yields and exports.
Spill over selling continued again today in corn, which helped to post new contract lows. Soybeans consolidated within Friday's range on Monday as supply bears and demand bulls continued to do battle. Wheat saw another negative day as new lows were made again.