Corn is finding support that has been tested several times over the last couple of months and soybeans continues to see terrific export demand.Soybeans tested some resistance levels in Thursday’s trade. Speaking of export sales, wheat beat expectations at 573,000 MT, corn came in at the high end of expectations at 272,000 MT and soybeans far exceeded expectations at 1,319,000 MT. Thursday’s session was driven early on by this report, but gave way later to a more technical trade.
As far as technical are concerned, we were watching the $7.20 area on March corn daily chart the last couple of sessions. This has been a key support area for the market over the last couple of months. The market retested it today and actually traded lower for quite a while ultimately ending a little above this support area. The next area of support we are looking at for in corn is $7.00, but then it gets pretty open below that level.
Soybeans made an attempt to get back over the 50 day moving average, only to fail near $14.90. This will provide a little resistance for the time being with further resistance coming in the $15.00 area. As for wheat, Tuesday’s reports finally provided enough bearish information to move the market out of the sideways channel we had been in for almost six months. We continued to sell over the last couple of sessions, but according to the RSI indicator we are oversold. Do not be surprised if we pause or catch a bit of a bid in the $8.00 to $8.15 area over the next few trade days.
Ethanol production fell again this week, while ethanol stocks increased. Our model continues to show weaker demand for corn out of the ethanol industry. Taking into account margins for ethanol production, we are showing a 125 million bushel lower estimate than what the USDA is currently showing.
Information about the world supply of grains came from analyst Strategie Grains which predicted a 9% increase in the EU wheat crop this coming year and a 16% increase in corn production. The increases are expected due to more normal growing conditions and more area being planted to these crops.
November soybean crush numbers are released tomorrow, so we’ll see if the crush rate backs up the increase of crushings projected by the USDA. Current estimates range from 147.5 to 164 million bushels with the average being 157.3 million bushels.
