Missed some market news this week? Here's what you need to know to market your grains.
Ag Marketing IQ
I’d say bullish sentiment is significantly higher than it was at $3.25 Dec corn. How does that make sense? As the market rallies, we all feel whatever is causing the rally will continue to push prices higher. Producers consistently ask me what we need to do to ‘protect’ from the prices going higher. Excuse me? We just rallied $3! I certainly understand wanting to participate in additional moves. However, we don’t need ‘protection’ from additional upside…our risk is to the downside.
Today’s grain producer has transparent and very liquid trade tools to manage next week’s, next month’s, or next year’s price risk. The broad menu of products allows those who wish to mitigate risk to narrow the time and price they want to manage, while remaining open to advantageous price moves.
Profit-taking at the end of the month following a big rally isn’t unusual. But Monday’s losses in corn and soybeans raised concerns over whether these gains have legs. At least that’s the perspective offered on price charts followed by so-called technical traders. Whether they’re true believers or skeptics, there’s no doubt a lot of folks watch charts for clues about where markets are headed. Whichever camp you side within the debate over the merits of technical analysis, it’s time to pay close attention. Even if you scoff about their power, these patterns have a way of becoming self-fulfilling prophesies if enough of the market’s buyers and sellers follow along.
January soybean futures traded at the exclusive $12 technical target on Nov. 23, 2020. Since then, January soybean futures attempted two more times to break through that $12 price point, but failed, creating a short-term profit-taking setback to the downside. Earlier this week prices lost close to $0.60 cents due to profit taking and news that South America would be receiving much needed precipitation. Can prices turn back higher and trade above $12 per bushel?
We have no idea what prices will do in the next four months. South American crops are expected to be big so they have to have good weather. If weather disappoints, more demand surges can be expected as nations stockpile. If Covid vaccines work, we could see world demand for commodities rise. Yet, if prices move too high, then we will kill our own market with big acres. But what we do know, is that we have so much to be thankful for.
The latest export sales report from UDSA, out Thursday morning and covering the week through Nov. 26, held plenty of disappointing data for traders to digest. Soybean sales tumbled to a marketing-year low, while corn and wheat volume fell slightly below their prior four-week averages.
Exports were reported on two days this week. Mexico took 7.2 million bushels of corn and unknown destinations took 13.5 million bushels of corn.
Corn futures edged lower this morning following steady rainfall in Brazil over the past week. Corn futures are on track to post their first weekly loss in the past five weeks if today’s weaker prices hold steady. Rains in Brazil this week sent soybean futures lower this morning, though losses were likely capped by steady export loading paces in the U.S. last week. Plentiful global stocks held back wheat rallies this morning. Prices were weighed down by strong Australian and Canadian harvests, as well as improving weather forecasts in the Black Sea region.
Corn prices faded more than 1% lower Friday as traders continue to unwind their net long position. Soybean prices saw another round of moderate cuts, as traders still anticipate record-breaking production in Brazil. Since opening just 2 cents shy of $12 per bushel on Monday morning, nearby contracts shifted 3% lower by Friday’s close. Wheat prices fell once again Friday, with lingering worries over an expected boost in Canadian and Australian production and fierce competition from the Black Sea region triggering another round of technical selling.