Markets are trading mixed overnight with corn seeing modest follow-through to the upside, although 4.50 looks to be stiff resistance, while the beans are leaking lower after yesterday’s report maintained the outlook for large supplies in the US and globally.
Managed funds on report day were estimated as net buyers of 15k corn to push the net long out to 116k, net buyers of 5k beans to reduce the net short to 68k, and net buyers of 2k wheat to reduce the net short to 59k.
USDA surprised the market with a much larger than expected upward revision to U.S. demand with corn exports up 150 mbu and ethanol usage up 50 mbu. There were only limited changes to the bean balance sheets with Argentine bean production up 1mmt.
India said they were lowering the limit of wheat stocks that traders and millers can hold in an effort to boost wheat availability and ease prices that hit record highs earlier this month.
The EU said soft wheat exports for the 2024/25 marketing season were 10.24 mmt, which is down 29% from a year ago.
Ukraine will see rail freight tariffs increase by 37% starting in February to meet price increases for fuel, electricity, and equipment repairs.
Corn posted a higher high, higher low, and sharply higher close on Tuesday with the market making a run at the highs from early October. The market is overbought after recent gains with stiff resistance at 4.50-4.52. Support is below the market at 4.44 and 4.42.
Beans traded an inside day on report day, finishing with small gains. The market remains in the lower end of its recent trading range with indicators suggesting a move back to the bottom of the range with potential for a large move. Support is 9.80 and resistance 10.09.
Corn is hitting recent highs this morning in follow-through buying after the USDA surprised the market with much stronger demand than expected on yesterday’s report. An increase in demand wasn’t a surprise, but the size of the increase definitely was. With that said, we probably have most of the bullish news in the market that we are likely to see until the January crop report, so the market may struggle to add value from here with nearby corn futures currently about 90 cents above the late August lows. While the supply outlook got a bit tighter, supplies are still adequate to meet the increased demand. Producers can look at option spreads to protect downside risk on unsold bushels.
Beans were able to trade slightly higher on report day despite a small upward revision to the Argentine bean crop with record total production still expected in South America. With the market hovering in the lower end of its recent range, there is risk that we will see the next leg lower as U.S. and global supplies are large. Producers should use options to limit downside risk on unsold bushels.
Corn up 1-2
Beans down 3-4