Closing Comments
Lynn Miller
December 8th, 2015
USDA Monthly supply & demand report out tomorrow morning at 11:00.
Anticipated carryouts: Corn – 1,760 million bushels
Beans – 465 million bushels
Wheat – 911 million bushels
Corn:
A tight trading range today with no new news to trade. Fund action was also missing in action. Some of the same old same old in the marketplace:
- China raised more corn than last year
- Illinois River shuts down this week (that was expected)
- Cattle margins a -$611/head
- Pork margins -$25/head
This market is continually looking for anything it can call news, or potential stories to grow a bullish tone. Today, the talk is about potential drought in S. America. An average stocks to use ratio for South America is 15%; however, projects due to drought this year lowers their stocks to use down to only 5%. At that rate, the country would require nearly 2.5 mmt in imports. This could be beneficial to the US Export program.
Brazil is shipping a lot of corn at 1.27 mmt per week but the average wait time per ship is 56 days. With US and Brazil prices neck and neck the US should hold the advantage of quick ship.
Technically, two of three indicators continues to be bullish the March. For the second day in a row we closed right on the 10-day moving average. Nearby support continues to sit at $3.64 or has the market put in a new bottom of $3.72 for the time being. The stochastics are in sell mode in neutral territory. My selling targets remain at $3.80, $3.85 at the 50-day moving average level, followed by $3.94 and $4.10 should we be able to regain positive momentum.
Soybeans:
Values slid further today as the currency battle is real in Argentina. The president elect takes office on Thursday. Talk is this will be delayed until 2016. If so that would be support US beans right now. The currency normalization is only ½ the battle. If producers sold 50% more stocks, would the ports actually be able to ship the bushels in a reasonable amount of time? And the answer is probably not.
China reported 7.3 mmt of soybean imported in November, 3 mmt over last year. China’s yuan made another move weaker against the USD. Their economy is slipping with expectations they will post a record slow quarterly growth rate.
Confidence in the passage of a producers blend credit has slipped dramatically in the past 24 hours. The bills fate is now up in the air.
Technically, all two of three indicators are now bearish the March futures. The stochastics are in full sell mode and entering neutral territory. We are now significantly below the 10-day moving average. The MACD is still positive; however, is now trying to come together. Nearby support has moved back once again and now sits at $8.64. Assuming you have made sales on the way up, I would be looking for $9.30 as my next target (this would be the 200-day moving average). If you missed this rally I would be looking to make catch up sales at $8.85, $8.94, $9.04 and $9.23.
Wheat:
A choppy session that hung on near unchanged most of the day. This market is torn between short covering of a relatively large fund position and high priced export values that keep dissuading buyers. The long range forecast remains favorable to wheat in the US.
Technically, two of three indicators are now bearish the March Minneapolis futures. We once again closed below the 10-day moving average and the stochastics have crossed over to issue a sell signal in neutral territory. The MACD is hanging on for now; however, it is coming together. Nearby support remains at $5.00. I am still serious about pricing some wheat at $5.25 futures, this is the 50-day moving average and 33% retracement. This also nets us $5.00 cash wheat at Craven/Bowdle/Northville. If you are needing to make some catch-up sales my other target levels would be $5.13 and $5.21.
