Written By Chris Robinson
Corn: CH settled down 17 cents at $7.03 which is a new 5-month low settlement. New crop CZ13 settled down 9 ½ cents at $6.13 ½ which is a one month low settlement. Corn posted its high early and then headed south for the rest of the day. Informa released an estimate of 99.026 million acres for anticipated corn acres in 2013. This was up 1million acres from their last estimate. One word, “Bearish”. This number, combined with heavy fund selling and thin pre-holiday markets combined to produce an early Christmas cocktail party for the bears. The fact that CH did not test 7.00 was interesting. It may be the last ray of hope the perma bulls are holding on to for old crop. Support below comes at the $6.90-$6.83 gap on the charts, which goes back to July; new crop, CZ13 is a different story. Looking at 99 million acres of production suggests we could be swimming in corn if we get timely rains and trend-line yields. 99 million acres at 160/bu yield gives us a greater than 15.84 billion bushel crop. Support for new crop CZ13 comes at 6.00 ¾ which was our 5-month low posted back on November 16th.
Wheat: WH settled down 5 ½ cents at 8.05 ¾ which is a new 5-month low settlement. New crop WN13 dropped 6 cents and posted a 4-month low settlement at 8.23. WH posted an early high then slid lower in a 22 cent trading range along with the corn. Informa estimated 2013 plantings will cover 56.8 million acres. Wheat was pulled down along with corn as the funds sold grains across the board. Wheat has been on the defensive since the last USDA report. 100,000 tons of wheat sold to Egypt and a small sale to Japan of feed wheat were two bits of bullish news. Also, WH was not able to take out the double bottom support at 8.01 ½. A failure of that level could open up another leg down of heavy fund selling. Support for WH on the daily charts comes at $7.75 and then $7.50.
Soybeans: SF settled down 29 cents at $14.37. New crop SX13 settled down 9 cents at $13.01. SF posted its high last night at $14.72 but after about 7:30 AM the beans started leaking, dropping almost 40 cents off its highs to today’s eventual low at 14.33. Informa estimated 2013 planted acres will be 78.962. This was down slightly from their last estimate at between 79.9 and 81 million acres. Today we did not see any more cancellations of previous sales to China. However, we also did not see any fresh news of more buying. Today’s break puts us right in the middle of the recent $1.30 rally. To refresh your memory, we had a $2.00 break in November, followed by a $1.30 rally back between November 11th and Monday’s high at $15.08. Today’s low marked a 75 cent drop in 3 days. Looking at the price after the smoke has cleared; we are still caught in a market which is trending lower in fits and stops. Bullish export news touted 2 weeks ago today is overwhelmed by fund selling and news of good growing weather in South America. Support for SF comes at $14.25 and then 13.72. New crop has support at $13.00, $12.88 and then $12.55.
Today’s informa numbers showed us one thing. Not all Christmas presents are good Christmas presents. Take 99 million acres of corn. Subtract 10% for any lost acres in the spring. Multiply that by trend line yields of 160 national average. That gives us 14.560 Billion bushels of corn. Suddenly a 450 million bushel carryout can become a 2 ½ billion carry out. Add in a record potential for the Argentine crop this year, even after a delayed start due to it being too wet early. China bought its first corn from Argentina this week.
The risk focus moves to one item. The weather. If we get the rains this summer and South America gets a good growing season, prices have nowhere to go but lower. Demand from Ethanol will save prices? Recent figures show greater supply and lower production with oil well under the key $100.00 barrel level. Is feed usage to cattle going to save demand? Not in the wake of record herd destruction in the past 18 months. It’s great to be an optimist. Today’s informa number was the first shot across the bow for 2013. I can understand wanting to stay full steam ahead. Damn the torpedoes. But it might be time to send out some air support and a few attack subs of your own to protect the fleet from what’s not on the radar today.
CER