Grains Analysis - Charts Hold

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Charts Hold

Thursday's weekly export sales report continued to show a soft export pace in corn, with 280 total metric tons sold the week prior and under the 4-week average of 348. We need one million metric tons or more weekly in order to be price friendly. China was absent from the players' list after nibbling at the market the three prior weeks at 193, 60, and 119 million. It may be that China will buy hand to mouth as needed, while loading up on beans here as the U.S. crop is in and more than $3 lower than the high of three months ago. If that's what China is doing it would switch to South American bean purchases next February through April as the harvest comes in.

At that point, China should enter to begin their 2012 corn need purchasing ahead of the late spring and summer high prices. Wheat sales were 503 million tons, down 18% from the week prior with most sales going to small Asian countries looking for quantity at value, and not quality. All high-quality-value corn sales are coming out of the Ukraine.

Soybean exports continue seasonal at 489 million tons. A series of previous purchase cancellations softened the otherwise friendly news that China was in for 534 million.

Demand is good but not great. Regarding South America, weather has been adequate for planting and early emergence. I'll put weather under the microscope now and isolate bean areas versus corn.

Brazil and Argentina grow beans and corn in completely different regions, not like here where each farmer grows a balance of the two. Over the next seven days, in Argentina, where 80% of their beans are planted, we'll see only 50% of normal rainfall. Brazil will see heavy rains over an area where 30% of bean production happens, and Brazil will have less than an inch over the area where the other 70% is produced. Temperatures will be generally cooler, forecasts say.

This is not necessarily a bullish forecast, but after measurable rain during October and November, December is starting out a little dryer and that feeds into fear about long-term dry conditions in December and February predicted by many weather groups.

Last week we held the $5.90 support for March corn and $11.00 January bean and this week we held upside resistance at $6.12 for March corn and $11.45 on January beans. Charts win as there were few fundamentals to control directions. The trade looks for further good world economic news in December. This should bring on further short covering and buying, but as always, you come in each day and use outside markets to determine grain direction.

March support for corn remains $5.90. A close under and $5.70 is next. Resistance overhead is $6.12. A close over and $6.34 is next. January beans have support at $11.10 then $11.00. Note resistance at $11.45 then $11.65. March wheat support is $6.00 then $5.80 and resistance is way up at $6.35.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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