Corn: CZ settled up 5 3/4 cents at 7.26 3/4 while new crop CZ13 settled up 2 cents at 6.08 3/4. For the week CZ lost 11 3/4 cents, while CZ13 lost 20 3/4 cents. Corn posted its low before the pit session opened, down at 7.11 and then trended higher for the rest of the day rallying through and impressive 19 cent range. As soon as Monday’s 6-week low down at 710 1/2 held, it was Katie-bar-the-door as the bears turned tail and scrambled. New crop CZ13 posted a 4-month low at 6.00 3/4 before it too rallied. Exports were dismal at 103,900 MT. The trade had been looking for 150K to 300K MT. At 10:49 AM, the EPA announced it would maintain the RFS (Renewable Fuel Standard). The continuation of this program is bullish for corn prices, as it supports demand. Basically the EPA said that eliminating this program would not have any measureable effect on prices due to the greater affect (in their opinion) from this year’s drought. One caveat: CZ13 posted a 4-month low this morning. Hedgers: CZ options expire one week from today.
Wheat: WZ settled down 7 1/2 cents at 8.38, posting both a 4 month low and 4 month low settlement. New crop WN12 settled down 8 3/4 cents at 8.45 3/4 . For the week WZ lost 48 1/2 cents. New crop WN13 posted a 1-month low and low settlement, while losing 42 3/4 cents net on the weekly charts. Wheat posted its high at 8.50 at 7:30 AM, and then slid lower with the corn until shortly before the EPA announcement for the RFS was released. WZ then rallied back 13 cents off its lows in choppy trade. The volatile nature of this trade can be summed up in the 87 cent swing from last Friday’s 2-month high at 9.16 1/2 down to today’s 4-month low at 8.29 1/2 . Wheat exports were 314,600 MT and were decent. The trade had expected anywhere from 200K to 400K MT. There were no new announcements from the FSU concerning ending exports, even though we had been promised such an announcement multiple times in the past several months. WN13 has support down at 8.25, with resistance up at last week’s 5-month high at 9.00. WZ has support at 8.29, 8.16 and then 7.90. WZ has resistance up at 9.16 and then 9.25. Hedgers: Weekly trading ranges of 87 cents scream out the need to manage risk and forget the guessing game. Last Friday, new crop WN13 had posted a 5-month high up at 9.00. Today’s settlement at 8.45 is well worth protecting. December options expire next Friday.
Soybeans: SF settled down 18 3/4 cents at a 5-month low settlement of 13.83. New crop SX13 ended down 8 1/4 cents at a 4-month low settlement at 12.62 1/2 . For the week, SF lost 68 cents, while new crop dropped 57 1/4 cents. The market sold off overnight on news of Chinese cancellations of 600,000 MT from previous sales. The weekly export sales estimates came in at 208,200. This was at the low end of expectations in the trade which had been expecting 200K to 425K MT. Funds continued to liquidate long positions. The overnight high at 14.09 was a distant memory at 10:30 when we touched 13.72 1/4 for a new 5- month low. The beans rallied back in sympathy with the corn after the EPA announcement to hold steady with the RFS. Today’s low mark, however, marked a 76% correction of the 5-month old rally which began on the June first low at 12.49 1/2 9-month low; extended $5.40 up to the September 4th contract high at $17.75; and was punctuated by today’s low which was 4.09 cents removed from those prices just 8 weeks ago. Technically, we have support here in SF at 13.50, 13.06 and then 13.00. Resistance lies at $14.25 and then 14.50. Hedgers: Today we took profits on deep in the money Dec and Jan puts. Now is the time we are reaping rewards for our patience on these puts.
The EPA has spoken. The RFS mandate remains in place. The EPA argued that the high prices we had this year were solely due to the drought and ending the FSA would not impact prices enough to justify ending the mandate. Producers are happy. End users are angry. My guess is this won’t be the last skirmish in this battle which has a lot of competing economic and political factors. The market action this week was impressive. If you had no hedges protecting long cash positions, you just lost a substantial amount of revenue on paper. Beans have now dropped over $4.00 a bushel since their September contract highs. On 5K bushels, you just “lost” $20,000.00. Wheat had a 90 cent swing from last Friday’s 2-month high down to today’s 4-month low. A week like this goes to show you how volatile markets can be when they get going. The stock market is a perfect example. On October 5th we were at 4 1/2 year highs at 13,599. Today we bottomed out at 12,434, back to our July lows. The stock market chart looks a lot like the soybean chart, and that should concern you, in my opinion. The funds have liquidated over 50K contracts of beans and 35K contracts of corn. Are they finished? They don’t send out those text messages before they hit the sell button. Can you really afford to have your bottom line subject to the whims of politicians and hedge fund managers? Use the tools we have to protect your bottom line. Stay balanced. Hold Fast. Have a great weekend.
Become a Client: 866-924-0486
CER
