Another two-sided trade in grains today as volatility waned as the trade looks for reasons to buy. Weather issues and a not as bearish as feared USDA report last week were reason for funds that were short corn and beans to cover. After Mondays rally that pushed beans and corn 10 percent higher from their September lows, funds promptly sold the rally on two fronts. The first reason was weather, as the harvest window for producers to get back into the field opened back up as too much rain/snow across the Midwest turned to cool, sunny, and dry. Second is no demand. Export sales reports for corn this week had sales for future shipment at a marketing year low while the market saw China cancel more bean cargoes amid weak soy meal demand. In short harvest pressure plus weak demand resulted in selling. Unless something enters into the market that is seen as bullish for both crops, further back and fill could be seen.
Wheat still has many bullish inputs for both Chicago and KC and for that matter the Minneapolis contract. However some of the bullish inputs that have pushed prices higher previously are running a little stale now. Bull markets need to be fed and the market is looking for further reasons to buy. Having said that, dips off of major trend lines continue to hold here in all three wheat classes as the market awaits the next catalyst to push higher or fall apart and trade down to 6 month lows well below the 5.00 handle in Chicago and KC. The best advice I can give is to study the weekly trend lines and let the market tell you what to do. I can email you what we have and share our triggers in the market upon request. Until then here are some levels and trades to consider.
Corn-settled at 367 basis Dec. Key resistance is 368.4 just above today’s close and then last weeks highs at 377-78.2. If we close above this level we push to 389. Support is at 360.2, a level I think will get tested next week should no significant buying emerge early next week. If we can’t hold that we trade down to 353. If that doesn’t hold its 343.2.
Soybeans-Nov 18 settled 856.6. A key trend line sits next week at 857.4 next week. A close above it and its 881.6. Above there its 889.2 and then 915. Half way back on this recent bean rally is at 852. Should that not hold it gets ugly in my view as I don’t have key support until 828.4. Under 828.4, we move down to 807. Under 807, I think we push to 20% down for the year at 765.
KC wheat-We settled at 516.2 basis December 18. Support is right here at 515.4. A close under and its 503.2 which is right around a 50 percent retracement for the year. If this doesn’t hold its 496.4 then 482. Resistance is at 531-534. A close over here and I have nothing major until 569. Sure there will be some moving averages in between but to me if we get that kind of push in KC wheat again, its due to something fundamental entering into the market.
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