Pre report positioning ahead of the November 9th WASDE report was the theme in the grain complex this week. Investors also are keeping a close eye on the election results Tuesday, especially if Trump can secure the upset.
January beans gave back as much as 48 cents from late October highs, as trend and index following funds liquidated longs positions made ahead of next week’s report. December corn retreated as much as 15 cents this week before firming slightly to close the week. The path of least resistance looks to be to the downside of both markets as private estimates flashed all week. Informa and other private estimates have soybean yield coming in above trend at 52.4 bushels per acre which would raise ending stocks to a massive 475 million bushels from 197 last year.
Export Sales for beans this week came in at a marketing year high of 2.574 million metric tons, with the bulk of the sales heading to China. The USDA also announced 3 more sales for future shipment to China this week totaling another 600 thousand tonnes. Despite the bullish demand figures the market sold off 22 cents this week. This speaks to profit taking and talk of increasing soybean yield on Wednesday’s report.
For corn, producer selling seems evident as harvest wraps up in many areas with storage hard to especially in the western grain belt. Recent longs have booked profits following the October rally with some specs selling corn and following beans lower. Export sales were robust this week as sales came in at 1.473 million tonnes besting expectations of just a million. Also, the USDA announced sales of 432K tonnes of corn to Mexico and 136K tonnes to South Korea.
Despite the strong sales numbers for both corn and beans, the bulls weren’t going to add more positions ahead of a suddenly uncertain U.S. election and the last major grain report for the year. Producers looking to protect downside prices in both beans and corn may consider the following trades.
Soybeans: Look to buy the March 2017 940 put while selling 2 of the March Soybean 1140 calls for 4 cents or 200.00 cost plus commissions and fees.
Corn: Look to buy the March 2017 corn 350 put and sell 2 March 17 400 calls for 3 cents or 150.00 plus commissions and fees.
Technical’s read like this for this week. For January soybeans support is down at 9.76 and with a close under 9.62 is next. Resistance is up at 10.11 and then 10.32. For December corn support comes in first at 3.42 and then 3.36 Resistance comes in at 3.56 and then 3.64. For December wheat support comes in at 4.08 and then 4.02. Resistance is up at 4.20 and then 4.26.