Grains finished sharply lower on profit taking. December corn fell 14 ¼ cents to close at $7.90 ¾. This has been the low end of the range for the past 6 weeks and a critical spot to hold support. November soybeans slipped by 20 ¾ cents today but we are still only one day off an all-time record high. December wheat closed 21 cents lower at $8.67 ¾. Domestic cash basis had another significant drop for corn and soybeans today.
We may be seeing some long liquidation due to the fact that harvest is well underway and seasonal pressures are at work. In the last 5 days corn open interest has dropped by 31,666 contracts. This may not seem very significant, but those numbers don’t reflect the most recent Commitment of Traders report which showed long liquidation from the ‘managed money’. These could both be signs of a massive position change by the biggest of the net long position holders. Or it may just be profit taking ahead of harvest and the September WASDE report next week. Either way the market is waiting for some fresh production estimates. A ‘bullish’ USDA report may be needed to add fuel for the longs as corn demand has certainly shown signs of slowing down.
We have private crop estimates coming out in the mean time with many estimates below the August USDA numbers. Informa will release their estimates this Friday.
Technically corn is still range-bound and we are at the low end of the range:
Look for support here but expect stops to be triggered on a breakout below $7.85 (Dec).
Though domestic basis for soybeans has dropped over the last couple of days, we have seen week after week of strong export demand. This week export sales will be delayed until Friday, but will certainly be a major indicator for market direction. The fact that the November:March spread came back to its 100 day for the first time since January may entice some longs to go back to the front months.
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