Corn: March corn settled down 1-1/2 cents at $3.70 which is a fresh 3-month low settlement. New crop December corn settled down 2 cents at $4.00 ¾, ending the week just above the psychologically important $4.00 level. For the week, March corn lost 27 ¼ cents while December dropped 25 cents. Corn was under pressure all day but managed to bounce slightly in the last half hour of trade. This looked like end of week/ end of month covering, rather than the beginning of a new bull move. With corn down 25 cents on the week it wasn’t surprising to see traders who were short the market book profits. Sunday night/Monday trade will be closely watched to see if it signals a sea change as we enter the new month. Will the funds hold on to their long bet between 185K contracts and 200K contracts? Technically CH has support at $3.63 ¾, $3.55 and then the contract low at $3.30 ½ posted 16 weeks ago. Hedgers: No change in recommendations. Wheat: March wheat settled down 5 cents at $5.02 ¾ which is the lowest settlement in 4-months. For the week, March wheat lost 27 ¼ cents, while new crop July dropped 25 cents a bushel also posting a 4-month low and low settlement. KC Hard Red ended the week down 24 cents, and Spring Wheat settled down 20 cents on the week, also at a 4-month low settlement. The US dollar trading above the 95.0 level near 13 year highs remains the wet blanket on this US market. Russia, for all its talk of export limitations, quietly continues to hit every bid available, while the US is at a competitive dis advantage with the most expensive wheat on the planet. The weather continues to be non-threatening here in the US. Fears of winter kill have not materialized. Hedgers: Yesterday Top Third recommended re-owning ½ of guaranteed bushel cash sales. We had recommended selling 60% of guaranteed bushels during the October-December $1.70 rally. Our average sale price versus the board is $6.27 for SRW and $6.73 for HRW. We also recommend using this re-ownership with call options as insurance play as the September averages were $5.93 for SRW and $6.30 for HRW. Soybeans: March Soybeans settled down 7 ¼ cents at $9.61, which is the lowest settlement in 3-1/2 months. New crop SX settled down 5 ½ cents at $9.45 ¾, also a 3-1/2 month low settlement. For the week, SH lost 11 ¾ cents, while SX lost 14 cents. The beans lead the grains lower through most of the day. Soy meal took a particularly nasty hit, falling through and $11.00 abyss today as funds repositioned. Over the past weeks, the managed funds have worked into a net short position of about 35K contracts. The recent Chinese cancellations, idyllic weather in South America and the start of exports from Paranagua and Motto Grosso have begun. What, if any issue will arise to give the bullish campfires some oxygen? For now the reality of a 400 million bushel carry out, a record harvest under way in South America and the US dollar at 14 year highs combine into a tri-fecta of pain for the bulls. Technically, SH has support at $9.50, $9.32 and then $9.20. Hedgers: No change in recommendations. Grain markets finished the month of January on their heels. The highs posted in December thanks to Santa Clause, the managed funds and a lack of rail cars combined to give the American farmer a true marketing gift capped off with 6 and 7-month high price spikes for the grains. The sell-off after those highs came as commodities in general have fallen out of the good graces of “managed money”. In most cases it hasn’t even been unusually large selling, as opposed to just a general lack of buying. As the world hits the “reset” button on crude oil, interest rates, copper, coffee, cattle, gold and the US dollar, we will continue to see volatile unpredictable moves. Russia today lowered its lending rates today in attempt to support what’s left of the value of a ruble with the collapse of oil prices. The US stock market has been whipping around in a 1,000 point trading range since Mid-December. With the Dow posting its all-time high on December 26th, at 18,000, it’s important to realize that every 1% move equated to 180 pts, while a 5% is 900 points. Monday we begin a new month. Barring any surprises from Mother Nature, the grains are at the mercy of the investment community’s decision on where to send the money flow next. Have a great and safe weekend. CER
