The corn market came under pressure following Wednesday’s bearish crop report from the U.S.D.A. and traded down to the lowest level since October 13. The USDA raised corn yield to a record 175.3 bushels per acre and increased overall U.S. production 15.226 billion bushels, while pushing ending stocks up to 2.403 billion bushels. The yield number and production bested the high end of expectations, and leaves corn with wiggle room near term for any increase in global demand, along with any tepid weather hiccups during South American growing season. Corn ended the week with a close at 3.40 December futures sitting at key trend line support while settling below key moving averages at the 50 day (342) and the 100 day at (346.2). Trend and Index following funds entered into this election week short just 65K contracts in corn. Prior to harvest these funds were short over 200K contracts. With record yield just announced and a stocks/usage ratio at 16.4 percent, it appears that without help from a surging soy complex or weather issues in South America, those trend and index following funds will pile back on the short side of the market near term.
Without the aforementioned bullish fundamentals entering into the market, the near-term highs for old crop corn contracts (Dec16, 359.4) and (March 17, 369.0) are likely in for some time. Producers and Speculators alike can consider the following trade into year end. Look to buy1 March 2017 340 put while selling 2 March 390 calls for 3 cents or $150.00 plus all commissions and fees.
Technical’s read like this for this week. For January soybeans support is down at 9.67 and with a close under 9.50 is next. Resistance is up at 10.11 and then 10.38. For December corn support comes in first at 3.34 and then 3.28 Resistance comes in at 3.51 and then 3.62. For December wheat support comes in at 3.96 and then 3.91. Resistance is up at 4.15 and then 4.27.