The week started off very quietly after poor finishes for the week last Friday. Markets traded lower Monday, but then corn and beans managed to come back and close well off the lows. Not much new has happened since the report last Tuesday (and not much new was in the report, either). We have had almost daily sales to China and unknown on beans, but the market has not been impressed with the size.
They did total almost 1.22 bushels last week, but traders want to see bigger sales to spark some buying. The volume has dropped, too, as the market seems to be headed back into holiday mode. We are not caught up on the commitment of traders report to know how long the funds are currently, but we know they have had some very big long positions in the beans. We will not be caught up to current until late January, but from the reports we have gotten so far, the funds were longer in soybeans than the market was anticipating. Seems like everyone is talking about the gap on Jan. beans that would be filled if prices trade down to $10.63, which is only 8 cents away from Monday’s close.
Thin holiday trade typically means technicals and charts drive more market direction. Maybe when we fill the gap in soybeans, the market can find support and bring some buyers back. China could come back to the market in a big way anytime, and that would also turn the market quickly. While last week’s totals have been pretty impressive, the market wants more and bigger sales. Whether intentional or not, China seems to have found the sweet spot on the pace of purchases where they can tell the administration they are on pace to meet the obligations, but they are not buying fast enough to get the market excited to rally. It did not help the bulls that the dry pockets in Brazil received needed moisture over the weekend.
Corn has held decent support despite weakness in the beans. We have good ethanol demand and huge exports to help support the market, but we do not have a spark to cause a rally. Corn is going to try to work higher, but it is going nowhere fast. Look for more sideways and range-bound trade.
The market is waiting on USDA’s Jan. update to have a better idea on crop size and watching for more signs of big Chinese purchases. Weather is not perfect in South America, but there is no big threat, either. Basis has strengthened on both corn and soybeans.