Last Thursday’s weekly export sales report laid out a few stories. Bean exports were 1.297 million metric tons. China was in for 1.166 of the total. Actual exported beans were 2.485 million metric tons with China in for 1.935 of the total. There was one switched amount of 726 thousand and a reduction of 392 thousand. These are large enough numbers to believe its China. But as large as export demand is for beans, this week’s government report putting ending stocks inventory at 465 million bushels versus the October report of 425 had funds selling the futures. Export sales are 61% of the projected USDA forecast for the year, but with ample supplies it is weather and its impact on South American crops that will drive the market. Current forecasts have adequate rain in Brazil and Argentina. Any change from El Nino to, too hot to dry and we can expect a measureable short-covering rally. Stay focused on weather now.
Corn exports were 618 thousand well under the 1 million needed weekly to draw in demand interests. In the mix there was one purchase of 246 thousand to an unknown destination; unknown is spelled 'C-H-I-N-A'. Now that it appears that China is done purchasing DDG, a corn derivative for feed, we should start to look for China to be in for corn for feed now since Chinese end users like ethanol producers and feeders can only buy from the government. So the government comes in, buys the low of the year in the world market and turns around and sells it to its end users for a profit. The price of corn makes it practical at this point for China to come in and buy corn from the U.S. We will watch closely for any sign of their presence in the market at which point we will expect a sharp short covering rally.
Technical’s read like this, December wheat support lies at 4.65 a close under and next stop is 4.08. Resistance is 5.35 a close over next stop is 6.25. December corn has support at 3.48 with resistance at 3.75. January soybean support lies at 8.38 with resistance at 8.80.