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Market Report

Thursday December 28th, 2017

March 17 corn closed down 1 ¾ at $3.52 and July 18 closed down 1 ½ at $3.69. January 18 soybeans closed down 9 ¾ at $9.45 ¾ and March 18 closed down 10 ¾ at $9.56 ¾. March wheat closed down ¼ at $4.27 ¾ and July 18 closed down ¼ at $4.54 ¼. Crude oil closed up $.18 at $59.87.

The streak had to end sometime. Though the words “overbought” and “corn” don’t seem synonymous of late, the corn market was indeed trending a little overbought after posting seven days of gains. “Correction Day” found the corn market finishing two cents lower. In a case, perhaps of “stairs up, escalator down”, on the mid-day lows, futures had surrendered nearly half of that seven day advance in a matter of hours. Managed Money funds were viewed back on the sell side today, selling out an estimated 5,000 corn, which would leave them net short 245,000 heading into tonight. With South American weather on the back-burner for the moment, the few remaining souls left to trade grain commercially were discussing the bitterly cold temps impacting the US Midwest & Plains this week. Wintry cold offers a mixed bag of variables, which usually trend “slightly better” to daily price direction; increased feed demand, logistics delays, and, of course, wheat winterkill chatter. This likely helped sustain buying into today, but was not able to hold amid a hard double-digit down-day in the soybeans.

Soybeans collapsed to a four-month low as buyers kept their hands in their pockets and let bear fundamentals and lack of a weather story take over which inspired sellers to pile in as we head into the New Year. The recent improvements in parts of Argentina and S Brazil along with the uncertainty from the export FM inspections to China are the new inputs this week.  The ongoing themes of excess supply and disappointing export activity continue. The old saying that the bull eats his for Thanksgiving and bear gets his for Christmas certainly has applied this year. The products were not immune to the selling either with both meal and oil under pressure but soybean oil made a trade into new lows. On the schedule, we’ll get the ethanol report tomorrow, January deliveries, export sales and CFTC data on Friday. Markets will be closed on Monday for New Year’s with a hard opening Tuesday morning similar to this week.  Beyond that we’ll get another crop report Jan 12th.

It has been an up and down week for the wheat complex, with trade struggling to put together back to back strong performances, but trade also not stringing together back to back poor performances either. The most disappointing aspect of the trade, is that the market has had an opportunity to extend gains and maybe make a really good trade, yet it has not taken that step. A couple of weeks ago during the December 11-13 time frame trade had drifted into new lows, but by doing so we uncovered an area that stimulated trade, thus causing a small short covering bounce. However, over the past five days Chicago wheat has traded in only a $.08 range. The market is back testing the upper end of that recent range, and is within a few cents of possibly igniting more of a short covering run. The increased export business at levels not too far below where the markets are trading now, combined with bitterly and dangerous cold temperatures across the upper Midwest and northern plains brought about ideas of possibly the funds covering some of their massively short position before year end. Yet that has not materialized yet.

Anna Kaverman

anna@mercerlandmark.com

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