Markets are starting off the week with corn unchanged and soybeans up 7 as traders prepare for tomorrows USDA report. The January 12th Crop Report is out tomorrow at 11:00. The USDA will update the supply and demand as well as the first quarter stocks.
On Friday the funds were net buyers of 15,000 soybean and 5000 corn contracts. Funds are estimated to be long 362,000 corn and 191,000 soybean contracts. The managed fund long position is near a record long. I expect this position will limit any significant move higher if tomorrows report is bullish as the funds already hold a significant long position. Combined corn, soybeans, soymeal, soyoil, Chicago, KC and MLS wheat commercial futures is near record 1,613,000 contracts.
Argentina has lifted a suspension on corn exports announced in December and will opt instead for a temporary 30,000 tonne daily cap on sales abroad. The agriculture ministry said in a statement in the early hours of Monday that it had struck agreements to guarantee the domestic supply of corn and cushion local prices against fluctuations in international markets, allowing it to end the full ban.
I believe we are nearing a top in corn, but think we may have a little more upside in the soybean market. The $14 dollar mark is a strong possibility on this run when looking at the retracement levels. My guess is that tomorrows numbers will be neutral in corn (given the recent rally) and traders may do some selling ahead of the report. Volatility is going to be really high tomorrow.
Producers should be making sales of old and new crop corn and soybeans at these levels. Keep in mind there is a very large long fund position and the fact that 10 million acres of prevent plant will be going back into the market as we head to the March 31st planting intentions!
Have a Safe Day!