Grains continued their selloff from last week with a gap open lower. December corn finished 12 ½ cents lower at $5.97 ¾, January soybeans 20 ¼ cents lower at $11.48, and December wheat 6 ¾ lower at $5.91 ½.
Outside markets helped push grains lower with the Dow Jones futures falling over 300 ticks at one point in the day. Crude oil was trading over $2 lower during the weakest part of the trading session while the dollar was stronger for much of the day. The outside market weakness was stemming from the failure of the Super Committee to produce a budget plan that they could agree upon, their deadline is midnight tonight. This is the 4th trading day in a row that December corn has finished lower. The near-term downside target for December corn is at the lows we found on July 1st and October 3rd in that lower to mid $5.70’s (see chart). Of course if it does get to those levels, this doesn’t mean it has to stop there, this is just where we found support in the past when production was still quite unknown. Of course production is expected to be well off of trendline levels, but we are still seeing demand rationing at these levels. Over the weekend Egypt contracted more Ukrainian and Russian wheat (240,000 MTs). Chinese corn imports are down 36.5% year to date. Every week we seem to be hearing more and more stories about Asian countries contracting feed grade wheat in place of corn. Until demand picks up we can see the price of corn and wheat continue to slip here in the US. Soybeans have not had great demand either, but if there were to be any weather problems in South America this winter we could see this market remain better supported than corn in that timeframe.
Fundamentally we still stand bearish especially in the wheat and corn markets. Technically these markets are also looking to point lower. Please call EHedger if you would like to discuss developing a marketing strategy for 2012. Our grain marketing software can help you discover your risk based on your current strategy and help you make marketing decisions going forward. Have a great week!
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