Special Market Update

Corn

December 2021 corn (CZ21) trade 9c higher today, closing at $5.3925. Corn rebounded today to cover yesterdays losses. The recent price action following last weeks USDA report feels like more of a technical recovery after the board tested 6-month lows around $5.06. Right now, it is hard to see any real fundamental reason for a rally other than lowering prices will most likely begin to incentivize buying on the export side of things. Locally yield prospects look very good so far but extent of damage in areas in Minnesota and the Dakota’s which were drought stricken this summer remains to materialize. The question is will the good areas in Illinois/Iowa/Nebraska outweigh the problem areas. The USDA did increase their yield outlook ever slightly in last weeks report, bumping it to 176.5 from 176.3. Remember, the USDA began with a yield of 179.5 before slashing it almost 5 BPA in the August WASDE report. Monday’s crop progress had U.S. harvest pace at 52% complete, 11 points above the 5-year average.

In technicals, corn is consolidating between the 200-day moving average at $5.21 and the 50-day moving average at $5.35. the market has struggled to hold above the 50 day the past few months but managed to close above that level today for the first time since late August. At the same time, the market has not sustained a move below the 200-day average in over a year, so the question becomes which will prevail the support or the resistance to the move. Support to the downside is seen at $5.10-$5.00, and any continued rally will be met with resistance at $5.47, and above that at $5.60-70.

Soybeans

November soybeans (SX21) closed at $12.4550 today, up 17.5c. Beans continued their bounce today with the fifth consecutive day in the green following a bearish September 30^th stocks report as well as a bearish WASDE last week. Like corn, yields in the Midwest have looked very good with many producers quoting averages over 90 BPA on irrigated beans. Similar to the way corn futures have behaved when we test $5.00 futures, beans attract a lot of buying anywhere near $12.00 futures right now. Chinese buying interest is the main fundamental driver of the rally this week. Current export pace is about still just about 50% of last year, although things have picked up in recent weeks the market will have to overcome a sluggish September. Currently, Brazilian conditions are improving as well and right now many are predicting a record-breaking crop for Brazilian soybeans.

In technicals, the market is slowly attempting to climb back to the 200-day moving average which is broke beneath following the September 30^th stocks report in which the USDA found 80mil bushels of beans to add to the balance sheet. It had held above that level since August 2020. Another technical warning sign to look out for is the 50 day MA crossed the 200 day from the top back on the 18^th, this is called a “death cross” so definitely something to keep an eye on with the recent increases in supply to the balance sheet especially. Any continuing rally with have resistance at $12.60 and above that at $13. Support for the move will be last week’s lows: first $12, then below that at $11.84 traded to on the 13^th.