December 28, 2011
By: Craig Haugaard, Grain Origination Manager

CORN: 3 higher

We appear to be the beneficiaries of a drought in South America.  With disappointing rains over the week-end and a ten day forecast showing hot and dry weather the corn and bean market moved sharply higher yesterday.  Corn was aided by the outside markets as Iranian war games in the Straits of Hormuz had crude oil a couple bucks higher at one point as well.  Even weekly exports had a ray of sunshine.  The export number came in at 39 million, well behind the 45 million posted for this week a year ago but it was noted that China was the buyer of 10 million of this week’s bushels and of course the specter of China sniffing around our corn market brought a surge of bullish enthusiasm to the trade.  Technically, all of my indicators are bullish with Fibonacci derived resistance in the March futures at $6.39.

SOYBEANS: 6 lower

The South American drought really lit a fire under the bean market.  It is worth noting that Argentina had normal rains in November but are at only 51% of normal for December.  Adding to the bullishness were the weekly export sales numbers which at 38 million were actually larger than year ago numbers.  It was also noted that China was back as a buyer.  As exciting as all that is I still feel obligated to be kind of a wet blanket and point out that for the year cumulative export sales are still running 32% behind last year.  Right now none of that matters as the trade has the South American situation front and center.  In 2008/ 09 La Nina drought that in many ways mirrors what we are seeing now, the total production for South America was down 18 MMT.  If we end up with a crop that is 10 MMT less than the current projections we could see the March 1 supplies down almost 7 MMT from last year instead of building up over last year as has been projected.  All of my technical indicators are bullish and in the March futures we have the next level of resistance at $12.20.

WHEAT: 4 higher

Wheat is following corn.  Weekly exports came in at 13.4 million versus 21 last year.  As reported in this space yesterday Russia is having good conditions while Ukraine and Kazakhstan are experiencing some problems.  We are seeing stories out of Ukraine that indicate that they will experience a 14% increase in spring grain planting.  From a technical perspective all of my indicators are bullish so it is time to hang on and enjoy the ride.

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.