Let's address the demand side of the market first with Thursday's weekly export sales report that gives us the amount of each grain sold last week and becomes our strongest near-term gauge of demand.

Wheat, the weak sister in the group continues to show the results of record inventories on foreign ports with U.S. sales last week at 341 T.M.T. up 2% from a very weak four-week average.  A little feed quality wheat went to Asia, while big world buyer Egypt continues to snub the U.S. and buy Russian wheat.  Egypt, one of our biggest yearly buyers hasn't even looked our way in what I believe is their political statement, but even if they were active again on U.S. ports, demand couldn't drive prices.  Wheat's hope for buying strength comes next year on production problems if they should occur.  Near term, wheat follows corn.  Corn sales were robust at 1.227 M.M.T., a new marketing-year high that began September 1.  We were up 45% from the previous week and 59% over a friendly-to-neutral four-week average.  Drought-hit Mexico was in again for 291 T.M.T. and our key Asian customers in for 481 T.M.T. versus 371 the week prior.

Bean sales were 934 T.M.T. up 1% from the week prior, with China in for 668 T.M.T. versus the two prior weeks of 613 and 312.  The 668 China bought is for future delivery while the report also showed 1.3 M.M.T. was actually shipped last week to China.  Each week we see good-to-great long-term sales to China and near-term shipments even bigger.  It suggests they are not just overbooking as a hedge against Sought American production, but intend to take all they sign up for.  Their goal to fill warehouses built for their strategic grain reserve was set back when poor 2009 growing weather forced them to draw on some reserves.  Now they are playing catch up and suggests they may not cancel any U.S. shipments for future delivery early next year if and when South American crop production becomes clear. 

China was active this week with purchases of 290 T.M.T. on Tuesday and 116 T.M.T. on Wednesday.  Weather next week looks to be very cold across the Midwest not allowing that last heavy snow covering about 1 b.b. of yet-to-be harvested corn.  At least three quarters of that or 5% of our total corn crop will sit in the fields until spring now and vulnerable to yield loss.  This further sets up for a potentially bullish January 11 U.S.D.A. monthly crop report.  South American weather really doesn't affect pricing until after January 1.  Brazil's planting season was the wettest since 1960, with Panama and Rio Grande do Sul with up to 20 inches of rain the last 90 days.  El Nino weather pattern always means wetter than normal, but we are seeing a split pattern where it is too wet in some areas of Brazil and too dry in other areas of Argentina.  If the current pattern holds, Southern Brazil won't plant all their acres intended while Southern Argentina will be too dry.   

Crop planting will finish by January 1, then weather goes under the micro-scope.  This week was a little wild but predictable.  On last Friday's report, we said don't buy March wheat unless a close over 5.50 occurs.  The high was 5.48.  It is just too soft a market with prices then falling.

We said to expect strength in beans with 10.60 basis January futures as upside resistance.   Our high was 10.68 Wednesday before closing about 10.55 then selling off.  I gave corn resistance at 4.04.  We saw 4.12 Wednesday on a high basis March before selling off.  So, on the week, our chart directions held pretty good.

On the downside, we had this week's support if a sell-off occurred for March corn at 3.80, the low was 3.91.

I gave January bean support at 10.15, the low was 10.08, and we had March wheat support at 5.18.  We had a low of 5.15.

The early-week rally was easy to call as demand drove corn and beans to our technical high range and a downward profit-taking correction should be no surprise either.  In a normal week, you either push to resistance and back off half way or just push to support then pull up.  But, we are facing year and month-end profit-taking so the price ranges are more severe.  We hit the high and low chart ranges in the same week.

Index and trend-following funds always take profit starting the third week of the month  - never waiting until the final last week dates.  This week had them in early as the third and fourth weeks of the month and year are severely shortened.  Next week, grains close early at 12:00 Central Time on Thursday and closed on Friday for Christmas.

The last week of the month, we have another early closing with a New Year's Day holiday close that Friday.  Funds on Thursday of this past week saw only seven full trading days left in the month with four days of shortened hours or closed.

I cautioned last week to watch for this year-end holiday volatility, and I warn you next week could see much of the same, as funds will trade the same amount of money but in a shorter period of time.  Get ready for a January 4 to 11 rally as funds come in with first of the new year buying allocation and speculators begin to cover shorts and buy long into the feared January crop report.  The fear is the government could cut corn production and ending-stocks appreciably and follow with more bean-ending stocks cuts as Chinese business expands.  Next week though, a short one looks to be volatile. 

March corn should trade no lower than 3.85 or higher than 4.14.

March beans look to trade no lower than 10.00 or higher than 10.70 while March wheat finds next  support at 5.06.  A close under here and 4.80 is next.  Don't buy unless a close over 5.40.  It is going to be another week of wide ranges and year-end posturing.