Corn: December corn closed down 3 ¾ cents at $4.21 ¼ which is the lowest settlement in 39 months. Corn had a very light trade overnight, tried to rally for the first 20 minutes, posting a high at $4.26, and then began a slow grind down to new lows. The $4.25 area had been support. The next level on the charts is $4.17 posted on August 12, 2010. After that we are looking at the contract low of $3.98 ¼ posted on June 29, 2010. Today, China and Brazil inked an agreement to open the Chinese market for Brazilian corn. The trade is expecting a base of 10 mmt of grain as a floor, or roughly $2 Billion worth of business per year. The last COT report showed the funds continue to hold a very large short position in corn. Hedgers: Today we were able to roll down CZ13 4.50 puts to 4.20 and take risk off the table prior to Friday’s USDA. We are less than 48 hours in front of Friday’s USDA. Take the risk off the table where you can.
Soybeans: January soybeans closed up 4 ¾ cents at $12.55. Soybeans had most of their trading range in the overnight session, interestingly, posting a high at $12.62 and falling to a low at $12.50 around 3AM CST. Technically, SF is still digesting the 3-month low and low settlement posted just yesterday. China reportedly bought a few more January cargoes. This Chinese buying may end up being the saving grace for the bulls. Friday’s USDA will give us hard data and should result in an impressive move one way or the other in the initial 60 seconds after the release of the report. Managed funds remain long soybean, as of the last COT report. The position has moved into the January contract, which is now top-step and has the most daily volume and liquidity. November is in delivery, and as such, should be avoided for hedging and speculative purposes, unless one has very, very deep pockets and a deep desire to take large equity swings. Resistance above for SF comes in at $12.62, $12.87 and then $13.12. Support below comes at yesterday’s 3-month low at 12.47 and then $12.18.
Hedgers: No change in recommendations. We are less than 48 hours away from Friday’s USDA at 11 AM.
Wheat: December Chicago Wheat settled down 2 ¾ cents at $6.53 ¼ which is the lowest settlement in 5 weeks. KC December settled down 5 ¾ cents at $7.16 ½, also a 5-week low settlement. As of the last COT report, managed funds had a net long speculative position in KC. In the worldwide market, weather in the FSU has been friendlier, and once again their wheat is more affordable than wheat from the US. The bullish news we received from weather issues in both Argentina and the FSU just weeks ago seems to have faded from the world spotlight. Friday’s USDA report should give us data that the market has been eagerly awaiting for the past 8 weeks. Hedgers: No change in recommendations. Get your risk on paper prior to Friday’s USDA report which is now less than 48 hours ahead.
There are days when it’s best to be brief. This is one of those days. If you have been following along with our cash sales and hedges this year you should be in pretty good shape. If you are not properly protected make sure you call your Top Third broker and get your risk on paper. A hedge on paper is your best bet to hang on to your grain and hope for higher prices. If you have sold all your grain and are concerned that the boat is tipping too far towards the bears, then make sure you re-own those sold bushels with some call options. Stay balanced with your marketing.