Special Market Update
Grain Market Commentary
Tuesday, November 26, 2019
By Rhett Montgomery, Account Representative, The Andersons
December corn (CZ19) traded 3c lower today, closing at $3.6750. It was a lower volume trading session as things tend to quiet down heading into the Holiday weekend. Snowy weather is currently sweeping across the Midwest here further delaying harvest in many places. Once we are past the holiday and end of month positioning, the trade will begin to attempt to pin down the exact impact on yield caused by late planting, excessive moisture, and a dragged out harvest in several key growing areas. Many in the trade are questioning whether or not it is more of a miss on acres by the USDA rather than yield alone, though the general feeling seems to be that yields are certainly off from a year ago (10-15 BPA seems to be a common number out here in Nebraska). Without a doubt, the final yield number published in the January WASDE report will be something the market will begin speculating throughout December. On the demand side of things, exports remain quite a bit behind last year’s pace and were thought to be improving until the USDA announced that 341k metric tons of corn sales were announced in error and were actually soybean sales. As South American old crop corn supplies begin to dwindle, and harvest still 4-5 or so months away it will be interesting to see if the U.S. begins begin to see improved business on the exports side of things.
In technicals, the market continues to struggle against the 9 day moving average which has begun acting as a trendline to the downside for this slide lower in the past few weeks. Stochastic indicators continue to be oversold. Support is at the $3.65 mark on December corn, if that should fail the next level of support would be in the low to mid $3.50s range. Right now resistance is seen at $3.75 and beyond that in the low $3.80s.
January soybeans (SF20) traded 8.25c lower today, closing at $8.8425. The market continues a sharp decline that was the story for the majority of November. As of today’s close the market is down 46.75c for the month. The market seems to have lost all patience when it comes to any discussion of a trade agreement nearing with China. At this point it appears the market wants concrete commitments in regards to a trade deal rather than the consistent speculation that China and the U.S. are close. South American crop prospects are also pressuring things as the crop is over 3/4ths planted and there has really been no delays/weather events to speak of. The USDA is currently estimating Brazilian production at 123 million metric tons vs. 117 million in the 2018/2019 crop year. As the 2019 U.S. harvest all but wraps up the general consensus is that yields are off 10 or so BPA combined with less acres year over year. With the supply side down year over year, the trade war level exports and project lower year over year crushings are what factor into the 475mil ending stocks for 2019/2020.
In technicals, the market broke below previous support at the $8.90 level. The next level of support seen is in the mid $8.70s and beyond that the early September low of $8.65. Stochastic indicators continue to be oversold. Any move to the upside would be met with resistance at $8.90 and most likely at the $9.00 level. Looking at the chart below, the market is quickly approaching that low set in early September, and beyond that the next downside objective would be contract lows from May.