It was a choppy two sided trade in corn, wheat, and soybeans this week as tight intraday ranges coupled with good export demand ended with slight increases in price week on week. Spot December corn and wheat gained five cents apiece this week with January soybeans gaining 7 cents. Export sales for corn came in at 1.66 million metric tons easily beating expectations with another 106 thousand metric tons announced on Thursday sold to China.
Informa released their spring corn acreage expectation on Thursday and has corn planted acreage 90.84 million acres versus 94.7 last year. Informa pegged winter wheat acreage at 33.7 million contracts compared to last year’s 36.14 million. These estimates were one small reason corn and wheat held weekly support levels at 3.37 and 3.96 respectively. The late week bounce for both corn and wheat although modest at best, was short covering due to December option expiration next Friday.
Those holding long option positions in the form of puts have been slowly covering front month futures contracts along with the unwinding of futures spreads; buying back front month contracts and selling the deferred months. The fact that we have a holiday shortened thanksgiving week next week most likely spurred traders to begin the roll.
The bean market has held up in the face of a rising US dollar that has hit 13 year highs amid hawkish commentary by the Fed Chair this week and an unrelenting post election stock market rally. Demand remains insatiable with China in buying soybeans every day this week but Thursday for a weekly total of 1.076 million metric tons. The continued buying has stymied any significant downside momentum following last week’s bearish WASDE report.
We are now a demand driven market, as the November report from the USDA is the last major supply side report for 2016. Weather in South America is for now a two sided coin. While recent rains in Brazil the last few weeks continuing through month end are sending needed moisture to the major bean growing areas of central and northern Brazil, Argentina has turned very dry with warm temperatures and very little rain in the 6 to 10 and 11 to 15 day forecasts. Should this weather pattern persist deep into December, trend and index following funds will build another weather premium into year end and into the early January crop report.
Technical’s read like this for this upcoming week:
For January soybeans support is down at 9.80 and with a close under 9.66 is next. Resistance is up at 10.03 and then 10.12. For December corn support comes in first at 3.37 and then 3.30 Resistance comes in at 3.48 and then 3.54. For December wheat support comes in at 3.96 and then 3.85. Resistance is up at 4.14 and then 4.21.