There is little fresh news in corn. The holidays are approaching with many traders taking time off until the beginning of the year. Currently, prices are supported from tight stocks, dry weather in Argentina, and expectations that China will import corn next year. Their interest needs to surface soon as exports are running 475 MB short of the level needed to reach USDA’s projection of 1.950 BB. Inspections last week were modest at 32.0 MB. If the anticipated demand from China fails to develop, corn will be in trouble. In other developments, the trend following funds added 20 MB to their long position last week that now stands at 1.405 BB. The longs of the index funds grew 15 MB to 2.205 BB. In the week’s ahead, traders will focus on China, the dollar, and the acreage battle next spring with soybeans.
March corn traded to 594.5 on Wednesday, which is likely a short-term top. Support is at 580 followed by 567. Unless there is a decline below this level, the market is in a position for a move higher to 600-607, which should be the next top. Longer term, the potential exists for a rally past 617.25 to 635. A top could occur late December or early January when a strong cycle high is due. Bear in mind that this could be a multi-month or a multi-year high. Be advised that prices may peak for reasons that are totally unrelated to the fundamentals for grains. For now, the long-term trend is up provided we stay above 552. Next week the odds are 60 percent that March futures will be higher.
Below normal rainfall persists in Argentina, which is the primary factor supporting soybeans. Meanwhile, growing conditions are favorable in Brazil. Export inspections were 33.5 MB and above the average needed to reach USDA’s projection of 1.590 BB. China took 24.0 MB or 71 percent of the shipments. Although exports are favorable, the pace has fallen 25 percent from its peak in September. Without China’s buying interest, the upside potential in soybeans is limited. In other developments, the trend following funds added 25 MB to their long position last week increasing it to 660 MB. The longs of the index funds grew 15 MB to 960 MB.
March soybeans rallied to 1324.75 on Wednesday, which appears to be a short-term top. Support is at 1290 followed by 1270. This level needs no hold because, if it fails, a lower low will have developed threatening the long-term up trend. Otherwise, the market is on track for advancing past last month’s high of 1354.5 to 1365, 1400, or possibly 1420. A top could occur next week, but it may only be for the short-term. Cycle analysis points to a stronger peak developing during late December-early January, which could be a multi-month or a multi-year high. Next week, the odds are 60 percent that March futures will be lower.
Dry conditions in the Plains and too much rain in Australia are underpinning wheat. Meanwhile, Australia may be getting a break as conditions over the next few days are expected to be drier. In other developments, exports are sluggish with the pace running 300 MB below the pace needed to reach USDA’s projection of 1.250 BB. Inspections last week were only 18.0 MB. Meanwhile, the trend following funds are covering their short position and have reduced it to 75 MB. However, the index funds have increased their longs to 1.070 BB.
March wheat has struggled since it peaked earlier this month at 811. Support resides at 742 followed by 734. Unless there is a close below 725, the market is in a position for a move higher to 832 or 845. If prices rally beyond the August high of 864.25, they could climb to 890. Be alert for a top late this month if the market is trading higher at that time. Next week, the odds are 80 percent that March futures will be higher.
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