Corn futures are leading the charge in grains. Disappointing harvest results are underpinning the advance. Informa Economics projects the final corn yield at 158.5 bpa compared to 164.7 bpa a year ago. We will get a better idea on production prospects as harvest progresses north.
December corn traded to 469 on Tuesday, then fell back to 459.5 Thursday.
From here, prices staged a comeback to 472. This is where it gets “dicey.” There is a chance that we may be near an important peak, but if Corn pushes through that ceiling, then they could move north of 500. Right now, a close below 442 is needed to break the up trend. Be advised that once prices peak, a sharp sell-off is to be expected.
Next week, the odds are 89 percent that December futures will be lower.
Traders expect a record yield in soybeans, but the market is marching higher from improving demand prospects. The crop looks good in most areas and is currently rated 64 percent in good-to excellent condition. What concerns me most, at this time, is that the combined long position of the trend following and index funds stands at 1.445 BB. If there is surge of bad news regarding the economy, it could send large speculators running for cover.
November soybeans rallied to 1057 on Tuesday exceeding the August high at 1049. As it stands now, we are likely in the final phase of the advance from the low made in June. Upside targets are near 1100. Be advised that when prices peak, it could be a multi-month or multi-year high.
Next week, the odds are 70 percent that November futures will be lower.
Their really is nothing to provide any strength to the wheat market at this time and the rise we are seeing is due solely to the fact that Corn and soybeans are supporting wheat prices.
There are other facts to consider, though with the wheat market
- Russia’s ban on exports may be lifted by December 31st.
- In the U.S., spring wheat harvest is 76 percent complete, 9 points below the average.
- Export inspections were below the average needed to reach USDA’s projection of 1.2 BB.
- Egypt is buying French wheat bypassing the U.S.
Right now, the market seems content to stay in a range bound by support at 683.25 – 677.5. We may consolidate a while longer, but be advised there is a bullish pattern being observed showing the potential for climbing past last month’s high.
Next week, the odds are 70 percent that December futures will be lower.
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