Corn: March Corn settled up 5-1/2 cents at $6.94 ¼. CZ settled up 4 cents at $5.81 ¾. CH posted its low overnight at 6.86 ½ and then trended higher after the opening and through the trading day through a 10 cent range. There was no major news affecting the market overnight. It looked more like traders getting even or positioning in front of the USDA on Friday. Monsanto released its estimate for 2013 corn acres at 96 million acres. This is neck and neck with Informa, which came out with 99 a month ago. The major story in corn has not changed, as the trade continues to digest the whys and how’s of corn posting 6-month lows just 72 hours ago on Monday’s trade. Exports have been less than stellar. The funds have been liquidating/ rebalancing. Monday’s low at $6.78 capped off a 90 cent haircut from the November 28th 3-month high back up at 7.67 ½. Hedgers: You can still protect new crop unpriced bushels with CZ 5.00 puts for less than 25 cents a bushel.
Wheat: March Wheat settled down 5 cents at $7.45, which is a fresh 6-month low settlement. Ditto for New crop WN13, which lost 5 ¾ cents and posted its new 6-month low settlement at $761 ½. China confirmed purchases of both US grain and Canadian grain. One would think that this would have been very friendly, bullish, and supportive for wheat prices. Wheat only managed a 10 cent rally from its 2:30 AM low at 7.48, posted a high at 7.57 on the pit opening before dropping down the elevator shaft. Through the afternoon, WH chopped in a 2-1/2 cent range for the next 4 hours and then settled on its heels late in the day. Any time markets move the opposite direction of major fundamental news, it signals and underlying dis-connect. This move argues against logic, but that describes this market for the past 2 months. Bulls have the following in their favor 1) the worst crop condition ratings in history going into the winter dormancy 2) continued dryness which has some talking about another potential dust bowl 3) Egyptians purchased our wheat: met with a sell off. 4) China purchased our wheat: met with a sell off. 5) US wheat is THE Least Expensive wheat in the world, yet exports lag… Add up all those bullish fundamental items and we stare at 6-month lows? It certainly does not add up. Hedgers: Call your Broker and get set in front of Friday’s number. Be proactive. These are still historically GREAT wheat prices.
Soybeans: March Beans settled down 1 cent at $13.85. SX settled up 3 ¼ cents at $12.89. SH posted its low on the 9:30 pit open and then trended higher in a nice 20 cent rally through the rest of the day. It definitely looked like spreaders were buying beans and selling wheat and corn. Confab raised their Brazilian estimates slightly from previous estimates. Technically, SH has a double bottom support (for now) at $13.56 which it visited on November 11th and again last Friday. That is a 6-month low for old crop. SH has major resistance above at $15.00. Support below is at $13.56, $13.50 and then $13.00. New crop has support at $12.55 and then $12.25. Resistance above for SX comes at $13.25 and then a triple top up at $13.40. Hedgers: You can still protect 12.00 beans all the way through harvest. 288 days of protection. Buy the SX 12.00-10.00 spread for 42 to 45 cents a bushel. Call your Top Third broker and get it done!
We are now less than 48 hours away from Friday’s USDA crop report. Historically this has been a report that gives violent price moves. Five out of the last seven years, this has given us LIMIT moves in Corn. Three of the five were LIMIT sellers and two of the five were LIMIT buyers. If history is a teacher, we know that we are looking at a coin flip. Manage the risk. NO ONE KNOWS what the USDA will say. Plan Accordingly. We have clients that would be hurt by sharply higher prices Friday… For them we have call options in place which gain in value if we see a LIMIT higher day. If you are a producer and have not sold a bushel of 2013 crop, we still have historically great prices which can be protected for very reasonable premiums. Hope for that $1.50 rally back, but manage your business risk. The puts are there to protect your unpriced grain if we have a LIMIT down day. The USDA might have a surprise in store for us. If we are disciplined in our risk management, we should come out in good shape.