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EHedger Afternoon Grain Commentary 12/20/12
Dec 20, 2012
Grain and oilseed markets continue to slide lower. March corn closed 6 ½ cents lower at $6.96 ½ March soybeans 26 ¼ cents lower at $14.04 ¾, and March wheat 15 ¼ cents lower at $7.90 ½.
The USDA announced more soybean cancellations this morning. China cancelled 540,000 MTs of 2012 - 2013 soybeans which is on top of the 420,000 cancelled yesterday. That’s over 35 million bushels of soybeans cancelled in 2 days! This is a significant amount on any year let alone when we were only expected to have a 130 million bushel carryout (December WASDE Estimate). Exactly why we are seeing cancellations after such strong sales in the last few weeks is still unknown. It could be for a number of reasons such as switching to South American beans or cancelling previous sales that were well above current levels. Gulf basis was down 10-18 cents today. With soybeans selling off and another poor corn export number this morning corn didn’t have much trouble breaking below the crucial $7 support level. Corn looks poised to fill the gap it made over the 4th of July (see chart).
Front Month Corn
Wheat sales were strong but that market has been negatively affected by the residual selling from the corn and soybean markets. We are once again competitively priced in the world market but from a technical standpoint wheat still looks negative. The next downside target would be at the 68.2% Fibonacci retracement of $7.58 (see chart).
Friday will be the last trading day for January grain and oilseed options. There are still over 10,000 January $14.00 soybean puts as of this morning’s open interest report so watch for breaks toward this level!
January Soybean Option Open Interest
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