Bits And Pieces
Monday's weekly export inspection report, a gauge of demand, showed little to rattle the market. Wheat inspected by the USDA for near-term shipment was a dismal 14.4 million bushels, down from 16.4 the week prior. Small Asian and island countries bought low-quality wheat to blend with corn for the feed ration, but no quantities were sold off to major world players for high-quality milling wheat for human consumption. Soybean inspections were 31.6 million bushels versus 41.7 the week prior and the 4-week average of 46.
Beans have rallied 45 points since last week, and without crop problems in South America, importers should be backing off on rallies. Key world buyer China was in for 24 million bushels versus the four prior weeks of 31, 33, 44 and 49 million bushels.
Corn inspections fared better at 38.5 million bushels versus 36 the week prior, 28 a year ago and the 4-week average of 29. I found that a little surprising, considering corn was up $.15 on the week but $.70 off the November high. Some saw that as a value. We need 40 million bushels weekly to be price friendly.
Demand remains a non-driving force to futures as corn, wheat and beans are running slightly under the year prior at a time when harvest supplies are plentiful. There's no fear that ending stocks will decline further near-term and most traders feel higher ending stocks could show up on this Friday's USDA crop report, especially as there will be no production update. The last three reports showed production declines. The next report on production is in January.
There's been more talk this week of South American weather turning drier, but it's just talk. If we continue drier we could see China overbooking U.S. beans as a hedge against South American weather. The weather site WXRISK.COM sees rain over 48% of Brazil's bean area with Argentina generally dry with less than half an inch anywhere. Next week it's dry again in Argentina and drier in Brazil with rains more north - outside of the soybean producing area. This should give support on breaks for beans.
Technically speakings: for today, March corn support is $5.90. A close under and $5.70 is next. Expect short covering and buying off that point as it comes from a long-term trendline off the April and July low.
As you know, we rallied $.16 off the $5.90 double bottom support eight trading days ago. We should expect a similar if not better bounce off $5.70. Resistance is $6.00 then $6.12.
January bean support is $11.10 then $11.00 with resistance at $11.40 then $11.65.
March wheat support lies at $6.00 and $5.75 with resistance up at $6.25. This week, grain markets struggle with the potential of positive news coming out of Europe's big economic summit to resolve their debt issues; on the other hand, negative psychology of an expected bearish crop report this Friday weighs on sentiment. Should we break down in prices Wednesday and or Thursday, expect short positions to cover or buy back to take profits; even though the report is expected to be bearish, the shorts have the profit, therefore the risk, and technical traders manage their accounts with principles and discipline. They won't leave those chips on the table. So don't sell a break the next two days, but buy the break especially near support.
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