Corn ended lower on Friday with profit taking after a four-day rally and was also pulled down by lower wheat prices. Bryan Doherty with Total Farm Marketing says it was kind of disappointing but at the same time the market did close higher for the week. “Corn has a lot of deliveries to work through in the next week or two so the pipeline is probably full and the end user still doesn’t look like they are hard chasing this. None the less it’s going to be a good technical week for corn as we posted what we call a hook reversal upward.”
The market is past option expiration and first notice day for March contracts was Thursday. So, Doherty says that has taken some of the pressure off the market tied to farmer selling and fund liquidation. The funds are record short in corn and he thinks they may have extended that position far enough.
So, does this finally confirm a low in corn? Doherty says end users are only buying what they need, while sellers and speculators are continuing to pressure the market. He says right now the market is in transition. “It hasn’t turned all the way yet but we’re hoping the speculators will start to get out of the market and their short position soon.”
Funds are still record short in corn and the combined grain complex, but Doherty thinks they have extended that position far enough and won’t want to take the risk of being that heavily leveraged going into the uncertainty of spring planting in the U.S. and the remainder of the Southern Hemisphere growing season.
Soybeans bounced on Friday with some short covering after heavy deliveries on Thursday which pushed futures into new contract lows.
The soybean market did end higher for the week but again, Doherty says it’s in transition. He isn’t confident the soybean market has put in a low because continued Brazilian harvest pressure will be a headwind as well as their lower prices verses U.S. soybeans. Private estimates currently have the Brazil crop around 150 million metric tons, 15 mmt off early season predictions but Doherty says with the recent weather the perception is production has stabilized.
Wheat futures saw a sharp selloff in all three exchanges and lower weekly closes. Doherty says the consolidation was partially technical selling. “Prices ran up into resistance areas on the charts earlier in the week and failed, then fell and took out key support triggering sell stops.”
However, sharply lower European wheat prices also drug down U.S. futures. “It’s hard for the market to rebound without price strength worldwide. What you’ve had this week is new lows in Paris milling wheat and the lowest prices in a few years,” he says. Russia continues to sell wheat at lower values and he adds that there is no bullish story to rally the wheat market.
