The December contract is hanging around the $4.26 mark this morning, which is about 14 cents off last Thursday's close. The biggest damage came last Friday, with the USDA failing to confirm a substantially smaller corn crop. Export shipments and sales were stellar again this week. The sharp sell-off in soybeans isn't helping matters and that slide might not be over if Chinese buying starts to dry up next week. The spread tightening continues. That should give us confidence that demand will be remaining strong in the coming weeks and months, which should ultimately give us a push above $4.50 mark versus March futures. Tight producer holding could the next wave of selling will also put a lid on the rally. Most producers and analysts still have an uncomfortable amount of corn to price and that's no major secret to the trade.
After an impressive 33-cent surge on Monday, the January contract has given all of that back plus six cents. What we're currently seeing is that classic "buy the rumor, sell the fact". We have seen with every soybean rally in history, there will come a time for a technical correction. From the fall low of $10.12 1/2 seen on October 1, the January contract climbed to a 17-month high of $11.69 1/2 on Tuesday. A good portion of that $1.57 rally was above most expectations, so a technical correction was essentially unavoidable. Given the lack of information from the CFTC over the past six weeks, no one has a solid handle on the fund position but there's a good chance that it was pushing the 750-million-bushel mark at its peak. That's the largest long position in November since the major bull market started unfolding in the fall of 2020. The Chinese have been strong buyers this week, which will hopefully continue next week and beyond. They're currently paying well above what the Brazilians and Argentines have to offer, which suggests that the purchases are being made by the Chinese government backed COFCO organization.
Energy futures got caught up in the equity meltdown yesterday and those losses are being extended this morning. The nearby crude contract is currently down $1.11 to $57.89, while diesel is down six cents to $2.47. There really isn't any new and bearish news floating around to ignite this slide, which puts the nearby crude contract in position to test the multi-month low of $57.46 from October 16.
John R. AndersonVice President of Grain
Farmers Union Cooperative
563-380-2311
