Hi, this is Tim Hannagan. It is Tuesday, December 13th, and the markets are closed.
***Corn
We started the week’s reports with Monday’s weekly export inspection report showing 33.3 million bushels of corn was inspected for near term sale down from 38 the week prior, under our four week average of 35 and below a year ago of 40 m.b. Inspections year to date are 495 m.b. versus 507 a year ago. I was surprised to see it so low as prices were hitting new contract lows last week but we can not lose sight of lost exports due to continuing bird flu concerns in Asia. The market shrugged off the negative demand news posting 5 cent gains on Monday’s open after Friday’s bearish USDA crop report pushed prices lower on the open only to see short covering leaving us with a higher close. This set us up for speculators to use Friday’s friendly chart close to buy heavily on the Sunday night electronic trading sessions posting two and a half cent gains. This helped funds in deciding to get out of some of their heavily short position on Monday’s open. While fundamentals of supply and demand remain bearish I have noted repeatedly on my web site to watch out for a December short covering rally as large speculators and funds take profits and balance out year end books. Looking ahead we were left with a chart gap for March futures between 2.04 and 2.08 left from Friday’s high to Monday’s low. Grains fill chart gaps 80% of the time within 4 days of making them. Most of the trade believes we need to fill all or some of the gap before more short covering can occur. Funds bought back about 15 thousand of their 50 thousand plus short positions. If funds and speculators plan to continue to do more year end short covering, then buy March corn close to the 2.04 chart gap low and get out on a close under it. A close over 2.09 sets us up to test 2.13 near term. A close under 2.04 sets us up for new lows at 1.97. Todays low was 2.042 a great buy.buy again Wednesday if lower trade happens.
***Bean
Monday’s weekly export inspection report showed 16.6 m.b. of beans were inspected for near term export, down from 32 the week prior, under our four week average of 27 and below a year ago of 26 m.b. Inspections year to date are 335 m.b. versus 425. Like corn, beans too shrugged off the bearish demand indicator after Friday’s bearish demand indicator after Friday’s bearish USDA crop report saw a lower open Friday and a chart reversal higher close. This led to speculator pushing us up 10 cents on Sunday night electronic trading lending to a 16 cent higher open Monday with fund short covering following pushing us to 30 cent gains in the first half hour. Funds were thought to be short about 30 thousand bean futures and options, short 25 thousand soy oil and 11 thousand meal. It is this heavy short position that had me caution you on this research site of a potential year end short covering rally. There is a gap left on the charts from Friday’s high to Monday’s low for January futures 5.72 to 5.82 and March 5.80 to 5.91. With funds buying back one quarter of their short position there is still room for more. If they can pull back at least into half the gap consider buying with stops under 5.72 for January and 5.80 for March.Unfotunatly we didnt fill any of the gap today befor funds began to cover. As bearish is the supply demand fundamentals it is hard to buy back shorts on strength such as they did off Monday’s 15 cent higher open. There more wanting to buy out on dips and average out.Jan. beans closed just off resistance.We need a close over 5.98 to trigger more shortcovering with potential of 6.10 next stop.
***Wheat
Monday’s weekly export inspection report showed 26.9 m.b. were inspected for near term export, up from 20 the week prior, over our weak four week average of 17 m.b. and above a year ago of 16 m.b. year to date inspections are 541 m.b. versus 596 a year ago. It is not a bullish number but it did come in over all its weekly, monthly and yearly comparisons. After posting new contract lows Friday’s and seeing Monday post big opening gains for corn and beans we saw some of the 100 thousand short positions in the market buying back Monday with 8 cent early gains. Tuesday’s news was more of the same bearish export news. Canada and Australia wheat stocks are nearly double what they were three crop season’s past. Australia continues to seek export licenses to sell more wheat into Asian markets. Additionally, Canada received news that a NAFTA panel voted in their favor against US tariffs on incoming Canadian wheat. This paves the way for cheap Canadian wheat to flow across the northern US boarder eventually. Though demand fundamentals remain bearish for wheat, there remains a huge net short position in the market with profits leaving room for more year end short covering. March is a good chart buy near 3.10 or on a buy stop over our 3.16 resistance as we saw today. Next resistance is 3.25 then 3.32.
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