After seven weeks with consecutively higher openings, we opened lower today. So what's up? Rain!
Tuesday night into Wednesday has Argentina's key growing areas with 1 to 3 inches of badly needed moisture. Late-planted corn will benefit a little, but beans are in their key pod setting stage and would benefit the most.
The price breaks were a little more than the rain event would suggest, but it's the end of the month when funds can pay bonuses on profits taken before Tuesday. We want to use the break in prices to be a buyer for next Thursday's February 9 USDA monthly crop report.
Whatever the low is to end the month, I anticipate it will hold into the February 9 report on two issues. One, the weather site WXRISK.COM sees potential for a return to hot and dry conditions starting February 5 for all of Argentina and southern Brazil. Two, the ongoing drought through January in Mexico, Argentina and southern Brazil should create fear that the February 9 crop report will show the government increased U.S. export projections to fill Mexico's needs and replace South American exports on production losses.
Fear, too, will be that the greater exports will cut ending stocks inventories. No one will want to be short into the report, and speculators will want to buy long with the move supported by the weather forecast.
Technicals read like this. March corn support is $6.24 then $6.16 with resistance at $6.42. March bean support is $11.75 then $11.55 with resistance at $12.20 then $12.40. March wheat support is $6.35 then $6.10 with resistance at $6.70.
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