December 27, 2011
By: Craig Haugaard, Grain Origination Manager
CORN: 1 higher
We are all familiar with the 12 Days of Christmas but this morning I wanted to look at my own version, the first trading day after Christmas for the past 12 years. When you do that you see that the March futures have closed higher 8 times, unchanged twice and lower twice in the first trading day after Christmas over the past 12 years. The eight higher closes have all come in the last eight years so I suppose the smart money would project a higher close today as well. The fundamentals would probably project that as well with the traded focused this morning on disappointing rains in South America. We have some more rain in the forecast for Brazil but nothing in the ten day outlook for Argentina. This is causing some traders to have flashbacks to 2008 when we saw the corn crop in Argentina come in 5 MMT below initial expectations as a result of drought. Toss in a weaker dollar this morning and we should open a touch better. Technically, all of my indicators are bullish. It is probably worth noting that last week we got near the 50% retracement level of $6.27 and back off. That level should serve as resistance in the March futures and if we can close above it I would project the next level of resistance to come in at $6.39.
SOYBEANS: 2 lower
I am hearing a mixed message on beans. I have one Chicago broker calling it higher this morning based on the disappointing rains while another one is calling it lower because of some rains in Brazil and early bean harvest reports coming out of the state of Parana, Brazil. Palm oil was lower in overnight trade in Malaysia and beans were lower in the overnight trade in China so perhaps we will open up a touch lower today as well. Historically we have been higher on seven of the last twelve, first trading days after Christmas. The one thing t5hat I will note is that in the Argentina drought of 2008 they ended up losing 12 MMT of beans from that crop so if the trade is trying to make the argument that 2008 is replicating itself this year that would be bullish in the longer term. Gazing into my crystal ball I see that all of my technical indicators are bullish. We are banging on some solid resistance in the March futures at the $11.76 level. That will be a key area to watch this week.
Wheat was steady in overnight trade in Europe. We are hearing reports that the wheat crop in Russia is in good shape while the crops in Ukraine and Kazakhstan are experiencing some problems. Look for this market to probably open steady today and to take its lead from the outside markets and the other commodities. My technical indicators are bullish. Looking at the March Kansas City futures I would expect to see resistance to this move come in at $6.83 with additional resistance at $7.13. I would be looking for a potential rally as funds buy back short positions in the next few weeks as a selling opportunity.
The information contained above was taken from sources which Wheat Growers believe to be reliable, but is not guaranteed by Wheat Growers as to accuracy or completeness and is made available for information purposes only. There is a risk of loss when trading commodity futures and options.