Corn and soybean futures posted a pre-Christmas rally for the second week in a row. It appears that farmers have locked their bins in the cash market, while paper traders were reluctant to take short positions.
December lows took out the previous lows in November, says Jerry Gulke, president of The Gulke Group
. "There wasn’t even paper money wanting to go short here. I’m not even sure what created this, beside South American weather. Short covering and evening up, you can blame a lot of things, but it did do a lot of things constructive to the technical picture."
If we continue to see the rally extend into next week, Gulke believes we could see prices approach the monthly highs. That is assuming there is no surprise weather event that brings moisture to extremely dry Argentinian corn crop. "With so much unknown out there, especially in production, enough was probably enough. Now we’ll see how much we can garner."
Gulke believes the Argentine crop is nearing the point where it’s not a question of if damage has been done. Now, he says, the question is turning to how much damage has been done.
On the livestock front, there was a somewhat bearish Hogs and Pigs report released on Friday. It was bearish, but only because the numbers were not as high as the trade expected. The report still shows a significant number of hogs on feed across the country, and that will lend support to grains.