February 1, 2012
By: Craig Haugaard, Grain Origination Manager

CORN: 9 higher

With wheat charging higher yesterday corn assumed the coat-tails position for a change.  The fear of wheat damage in Europe coupled with ongoing fears of a shrinking crop in South America should have us higher today as well.  In talking to various analysts I am running into folks that believe we could see the size of the corn crop in South America drop by as much as 9 MMT from what the USDA had in their January forecast. 

Technically, all of my indicators are bullish and in looking at the December futures, the next level of resistance comes into play at $5.78 while in the March futures I am looking at $6.65. 

SOYBEANS: 10 higher

The story that grabbed my attention it he beans yesterday was a report from Oil World in which they lowered their estimate of the South American crop.  They dropped their production estimate for Argentina to 46.5 MMT while they reduced Brazil down to 70 MMT.  As a comparison as recently as the December report they had Argentina factored in at 52 MMT while they were projecting a total production of 72.8 MMT for Brazil.  Does this mean that the estimated reduction of 8.3 MMT from Argentina and Brazil is going to send an equivalent amount of export business to our shores?  That question remains to be answered but the prospect of that happening had us higher yesterday and should push us higher again today.

Two of my three indicators are bullish at the present time and from a resistance standpoint I am watching the $12.32 level basis the November futures.

WHEAT: 9 higher

Global warming has apparently missed much of Europe.  With fears that extreme cold the next week or two will severely damage the wheat crop in the old country we had wheat sharply higher yesterday.  The rally was also aided by the ongoing fear that Russia will soon slap an export duty on wheat leaving that nation.  During the session yesterday we traded wheat high enough to break through some resistance points which in turn brought in additional buying.  With the funds short the Chicago wheat futures we have the potential for substantial buying if they decide to get even and/or go long the wheat market.  The problems are not just confined to Europe with reports coming out of China that drought in that nation will cut into wheat production.  It seems like we have been hearing the Chinese drought story every year for several years now so I don’t know what to make of that but it is in the mix for the time being.  The crops here in the USA look pretty good right now, but that does not matter as we are trading the world conditions and right now that is bullish. 

My technical indicators are all strong and long at the present time and it will be interesting to see how wheat acts as it approaches the trend line as illustrated on the following Minneapolis September futures chart.

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.