Monday's Grain Market Recap 12-19-11

Published on: 15:26PM Dec 19, 2011

Grains started off with a gap higher open last night and continued to hold strength right into the close of the day session.  March corn was the upside leader and finished 18 cents higher at $6.01. January soybeans were up 7 cents at $11.37, and March wheat was up 16 cents at $5.99 ¾.

A less favorable forecast in Argentina was the main reason for the gains overnight.  Surprisingly, it was corn that ended up the strongest.  It was announced that China has begun replenishing state corn reserves.  This should be supportive for their local prices, but as far as importing from the US, we don’t see this as a likely scenario until they burn through more of their own supply first.  On top of this, the Mexican ag minister said that they would unlikely be importing more corn than expected in 2012 due to a poor livestock sector and "other" feed options (wheat).

Since we are coming off of oversold levels these rallies could have some more technical support coming in behind them.  Soybeans gapped above their recent trendline resistance (see chart) and the next major moving average isn’t until the 50-day at $11.80 (Jan).  The March corn 50-day moving average is at $6.305 (see chart).

This week we could see a choppy, low volume trade as many traders will be out for vacation.  Until we get to the January reports there are not a whole lot of major fundamental news events to be expected.  We want to use these rallies to catch up on hedges if necessary.

Chart: March Corn

Red-50 day Blue-100 day Grey-200 day

Chart: January Soybeans

Red-50 day Blue-100 day Grey-200 day


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