The second consecutive holiday-shortened week of trade saw corn and wheat close lower, but late strength on Friday erased much of those losses. The soybean market was not so lucky, finishing the week over $.40 lower than last Friday’s close.
The soybean break was triggered by a combination of factors. The South American weather situation has improved over the past two weeks and although Southern Argentina is still dry, the overall area of concern has shrunk. In addition, the Chinese cancellation of U.S. DDG’s en route to that country triggered a collapse in domestic DDG prices of over $30 a ton. This led to speculation that soybean meal would be displaced as a feed additive and created a sharp selloff to spot soymeal prices. Finally, the funds added to the price pressure as values plunged through the 50- and 100-day moving averages causing the funds to exit some of their long held market length.
The wheat market has been in free-fall since making seasonal highs just over two months ago. The price slide has been over $1.25 per bushel in depth. In fact, over the last 22 trading sessions 17 of those have resulted in a lower close in Chicago December Wheat. However, on Friday the wheat market managed to hold its previous day’s low and rallied to its best daily performance since Oct. 18. Many have tried to pick a bottom in this wheat market and many have failed. Follow-through early next week will have to be seen to confirm even a short-term low in this market, but with the funds holding a record short position, this is a market to be watched closely for opportunities as trade resumes on Monday.
Most of next week’s attention will be on position squaring and the expected fund re-balance ahead of Friday’s USDA report. Producers can look to strength in the first half of the week to extend coverage if they are not at comfortable levels.
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