AM Comments 01/05/15
Monday, January 5, 2015, 7:01 AM
Submitted by: Dustin Weiner
After a rough week last week (corn down around 20c and soybeans down over 45c) the markets are trying to bounce back this morning with corn, beans and wheat all higher as I type this. Last week both corn and soybeans broke out the bottom side of their ranges. What used to be support levels for those markets can now be considered resistance. It will be interesting to see if we can break back into our old trading ranges on this rally or if these new resistance levels hold and we trade a new (lower) range this week.
As far as news goes today... There is talk of improved Chinese demand which may be what is supporting the markets. There is some dry weather showing up for Brazil in the 7-10 day period, bringing drier, warmer temps and potentially shrinking the soybean crop a touch. Also, some are saying that the rally overnight may have been led by fund buying – if true, this could mean that new year fund rebalancing is taking place and in this case that is good for prices.
It appears that if we are to have a chance to run this market into new highs, we will need help from the USDA reports that are out 1 week from today. The easiest way to make a case for higher prices would be for the USDA to confirm the planted acre data we saw from NASS (it showed a reduction in acres) by showing a decrease in crop size. Even with that, we may also need the USDA to push domestic demand into record levels to justify these higher prices (livestock margins have been positive of late which should have helped demand). Outside of that, it is hard to get too bulled up on corn/soy prices long term. It feels like the markets this week may trade mixed to higher, patiently waiting for the report to come out on the 12th…
Corn 4 to 7 cents higher
Soybeans 8 to 11 cents higher
Have a great day!