Corn, wheat, and soybeans all closed higher on Monday. Corn strength was supported by the higher than expected export inspections this morning. The market was expecting about 11.5 million bushels and they ended up at 21.12 million. Wheat and soybeans were near their expected levels which helps explain why corn held the most strength into the closing bell.
A high pressure ridge in South America’s two week forecast is also helping to support price. Dryness in Argentina is expected in the 10 day forecast while Brazil could see some harvest delays from increased precipitation in some areas. We will be monitoring these situations as the information flows in. A large enough reduction in Argentine corn production would be a chance to see another late surge in old crop US corn.
If we see harvest delays out of Brazil it could also help our soybean re-ownership strategy which is long the March-July soybean spread. As of Monday the spread settled at +25 cents. Our short term target on the spread is +45 cents which is just below the 100 and 200 day moving averages.
There are still a lot of unknowns for wheat but I believe it is the product most fundamentally supported at this point. Monday’s crop ratings in Kansas were down to only 20 percent good to excellent! Weather is still dry in the US and we came into the winter with the worst crop ratings on record. We are also coming off of a major price break which brought us down to competitive prices in the world market. Wheat sales were at 572,500 MTs last week and export inspects were 22.28 million bushels, both slightly better than estimates.
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