Our weekly export sales for corn came in a little weak at 234 T.M.T. sold last week, down from our four week average of 761 T.M.T. This occurred as some previous purchases were cancelled and moved to 2011 crop year delivery. This is the second consecutive week of this action and suggests importers feel there is enough corn around for near term demand at value but today's price locked in maybe significantly cheaper than a year from now. Key Asian customers did increase near term purchases by 84 T.M.T. over the week prior so demand remains good but not great. Look for November demand to be exceptionally strong on the domestic cash market as local ethanol producers, feedlot operators and exporters rush in to buy when harvest finally gets underway as they're all caught short on inventory.
Soybean exports last week were 987 T.M.T. This over the four week average of 908. China was in for 741 T.M.T. of the total. I continue to expect China to overlook U.S. beans as harvest progresses well into November as they meet near term needs and garner insurance against crop problems in South America during January to March when yields are made.
Note, if South American crops are projected to be big come February we will look for cancellations of some of these U.S. purchases by China as they switch to cheaper beans in Argentina and Brazil but forget that for now and expect strong near term demand for beans.
Wheat sales last week continue to be better thanks to the lower dollar. Sales were 627 T.M.T. and over our four week average of 572 T.M.T. Record ending stocks here and abroad leaves demand a weak fundamental but thought it doesn't say be long on shortages it continues to tell trend following funds not to be short and this is what's supporting the market. Funds have gone from short 70 thousand contracts to only short 47 thousand as we came into this week. That is what the improved demand has done.
This week's strength in corn, beans and wheat was all about heavy rains in the Midwest delaying harvest and draining the pipeline of badly needed grain for domestic usage and exports. Higher crude oil is creating a bullish psychology for corn and its use for ethanol and beans for soy oil to bio-diesel fuel and the lower dollar suggesting a favorable exchange rate to buy U.S. commodities. Next week looks to be much of the same but a possible twist to be aware of.
Current weather forecasts suggest another very wet week from Nebraska east to Ohio causing further bean and corn harvest delays.
This should give us a Monday rally as the market prices in the weathers effect. Monday and Tuesdays open could be the high of the week. Next week is the end of the month and two events may collide to encourage some profit taking. Index funds must liquidate enough long positions held to meet the new government regulation on lower position limits by Fridays close. Then a early week rally puts index and trend following funds fat with long profits to look at taking profits as many fund contracts allow bonuses on monthly profits if taken before the month ends. In simply pointing out that profit taking next week is set up to be bigger than each of the last two weeks. The on course we look to get long off next weeks lows and hold into the November 10th U.S.D.A. crop report which should have more traders expecting lower crop production numbers as the last month left some corn and beans short of full maturity due to frost ending the growing season early.
Support on December wheat lies at 5.40 Monday and resistance now at 5.84. Hold long unless a close under 5.40 occurs or take profits on Monday's rally if near resistance.
Today Friday we had minor support at 10.00 basis November then 9.75. A close over our 10.25 resistance and next stop is 10.65 you can take some profits on a rally to 10.65 but don't hold a move under 10.00 as we can buy in lower for the November 10 crop report.
December corn support lies at 4.00 today Friday then 3.84. Don't hold longs under 3.84. A close over 4.10 sets up 4.30 as next resistance which could be seen next week if the weather is as bas as its is expected.
In conclusion, stay bullish long-term but be careful as an early week rally could give way to month-end profit taking.