Corn Outlook:
The advance in corn stumbled this week because of the increased chance for rain in Argentina and lackluster exports. However, large speculators are not throwing in the towel, just yet. Meanwhile, the trend following funds expanded their long position 195 MB last week to 1.740 BB, while the longs of the index funds fell 35 MB to 2.095 BB. In other developments, export inspections were not impressive at 25.8 MB, as they were less than the average needed to reach USDA’s projection of 1.950 BB. Currently, shipments are running 33 percent short of the pace required to achieve their target.
March corn peaked last week at 667 followed by at setback to 639.25 on Wednesday. The market has rebounded but acts like it will trade in a sideward pattern for the next couple of days. Support is at 645-640 with a slight chance of testing last week’s low at 627.5. Once the correction from 667 has ended, a final thrust to 680, 690 or 705 is expected which could be a major high wrapping up the advance from the low made last June at 356.75. This may occur during the first week of February. Be advised that the long-term trend indicator is approaching levels not seen since the highs of 2008, 2004 and 1996. Historically, corn futures trade lower in February 52 percent of the time. Next week, the odds are 60 percent that the March contract will be lower.
Bean Outlook:
Improving weather in South America has weakened the advance in soybeans. However, fund buying and strong exports are providing underlying support. Last week, the trend following funds increased their long position 65 MB to 775 MB. This is 25 MB short of the record set last November and suggests that the enthusiasm of large traders is becoming overextended. Meanwhile, the longs of the index funds fell 40 MB to 900 MB. In other developments, export inspections were better than expected at 42.0 MB and above the average needed to reach USDA’s projection of 1.590 BB. China took 29.1 MB or 69 percent of the shipments.
March soybeans have struggled since topping a couple of weeks ago at 1432.5. Prices fell to 1364.25 on Wednesday and recovered. So far, the pullback from 1432.5 resembles a correction meaning that higher prices are likely. However, be advised that a close below 1355 breaks the uptrend signaling that the long-term advance from the low made last July at 906.75 is complete. Meanwhile, unless this happens, the market has the potential of moving upward to 1460 or 1495. A top could occur during the first week of February depending upon when the correction from 1432.5 is complete. Right now, you should be aware that the long-term trend indicator is approaching levels not seen since the highs of 2008, 2004 and 1996. Historically, soybean futures trade lower during February 60 percent of the time. Next week, the odds are 58 percent that the March contract will be higher.
Wheat Outlook:
Wheat futures continue their upward path because of quality issues with Australia’s crop and dryness in the Plains. Export inspections were in line with estimates at 23.0 MB but below the average needed to meet USDA’s projection of 1.3 BB. Shipments are currently running 15 percent below the pace necessary to achieve their target. In other developments, the trend following funds are flat wheat, while the index funds are long 1.015 BB. This is encouraging, as the funds will likely accumulate a long position.
Late last week, March futures rose past resistance at 825 climbing to 863.5 on Thursday. This is short of the high made last August at 864.25. Currently, the short-term wave pattern shows that unless there is a sell-off below 820, the chances are we will continue higher to 890. If this develops, be alert for a top that could occur during the first week of February. Historically, February is not a good month for wheat futures as they trade lower 79 percent of the time. Next week, the odds are even as to whether the March contract will be higher or lower.
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Comments and suggestions are provided for information purposes only. Information contained herein is obtained from sources believed to be reliable but not guaranteed to its accuracy or completeness. Readers using the information contained herein are responsible for their own actions. No presentations can be made that recommendations will be profitable or that they will not result in losses. This information is neither an offer to sell nor solicitation to buy of the commodity futures mentioned herein. The writer may be trading in the commodities mentioned.