Corn, Beans, and Wheat were down appreciably on the open this morning. Corn and Beans were able to trade-off the lows to finish 1.2 cents lower on
Dec corn, while Nov 18 beans finished 7 cents lower. Wheat was the weakest here down 14 cents in Chicago, KC down 16, Minneapolis down 11.4. Managed funds have sustained a long in the market according to COT data that showed them long over 60 K contracts each in Chicago and KC. It’s a sizable long in the market for wheat and to me it screams as if a 50 percent retracement could be in the cards before any meaningful buying re-enters the market. Half way back for the year sits below 5.10 for both contracts and if the liquidation continues, I think we might trade there prior to the next crop report. Both KC and Chicago have lost over 50 cents to corn from the beginning of last week and I look for these spreads to tighten further. Granted there are still weather issues globally and they could re-erupt at any moment with noise out of the Ukraine that their milling wheat crop is worse than thought. As always trade the charts. KC resistance (Dec 18) is 539 this week, a close over and we could push to 564. A .382 retracement from the top is at 526.4 which is 3.4 cents lower from today’s settlement. Halfway back is 504, a 50% retracement target. Chicago similarly could push to the same levels. Dec Chicago needs to settle over 530, to make a run for 548.2 and then 559. If we stay below 530, look for a push to 513.4 and then 504, trendline areas of support. One can aggressively sell either KC or Chicago vs Corn but be out on closes above the aforementioned resistance levels.
Corn and Beans pushed higher on renewed intra-day interest on thoughts that a trade deal with Mexico would be the demand black swan and savior for prices. While both contracts have a bull story longer term, I’m not sure who would be chasing a rally here? Dec meal settled down at 310.6, a few tics off the Jan low, after making a new yearly low at 308.3 in early trading. Funds are still long meal and a further gap fill on the charts would drop price to 296, the 2017 low. Nov beans below 854 put the July lows at 826 back in play in my view and it may get real ugly under neath technically. funds are short 40 K of beans while long 52 contracts of meal as of last Tuesday (8/21) according to COT data. Given movement in price at the end of last week and today, it looks as if longs are bailing on meal and adding to bean shorts. My opinion here. Friday is first notice and the end of the old crop year and month end. Do funds push corn, beans, and meal lower into month end, only to re buy after the holiday weekend? Another outbreak of African Swine Flu is being reported in China giving thoughts to reduced meal demand there. Again watch the charts. If Nov beans stay under 854, the next level of support is 826. A close under here and I think we may push to the 7 handle. A close over 854 this week and we can push to 863.4. A close over here and its 880.6. Dec corn has major support at 352. 2 this week. A close under and its 341.2. A close over 365, and we could retest 374-376.
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