DECEMBER CORN FUTURES:
For the third time since July 25, December corn has opened with a gap higher, and depending on Monday's close (the jury is still out on that), there will be a total of three unfilled chart gaps on the December contract. Monday's market action seems to show December breaking out above a small bull flag chart pattern, which suggests higher values yet to come. If that is the case, and it is certainly not an exact science, the minimum move would project a move to $7.00 or above. The market action seems to reflect the trade opinion of sliding corn yields following the summer drought, but with a full harvest straight ahead it seems like a strange time for the market to be rallying.
There is no doubt that the Midwest crop tour, which projected a yield that was more than 7 bushels per acre below USDA's, has traders thinking that the summer drought damage to corn in the midst of pollination could have been far worse than earlier imagined. DTN's own Digital Yield Tour from early August, powered by Gro Intelligence, seemed to be a forerunner of yields to come, with their national corn yield on Aug. 1 reflecting 167.1 bushels per acre. Monday's early morning trade is just below the 100-day moving average, with a move above that likely to bring in more non-commercial demand. Non-commercial traders last week added 43,000 contracts to their net long corn position
OCTOBER SOYBEAN MEAL FUTURES:
October soybean meal futures early on Monday are pressing up against what appears to be a double top chart pattern around $441 per ton. The double top is the result of trade over a six-month period, so the $441 area should provide solid resistance. However, a solid close above $441 could lead to an acceleration of the uptrend on meal.
The problem is that the trade perception of the U.S. soybean crop is that it may be getting larger. Already projected to be record large, according to both the USDA and the recent Midwest yield tour, recent rains in some key growing areas could push production even higher. In addition to that, Brazil's economic forecasting entity, CONAB, recently projected Brazil's 2022-23 soy crop, with good weather of course, to be as record setting 150.3 mmt (5.52 bb).
The soymeal futures market could go either way from that double top level, and if soon-to-expire September meal is a forerunner of things to come, it soared to yet another new high on Monday.
MINNEAPOLIS DECEMBER WHEAT FUTURES:
Minneapolis December wheat, as well as KC and Chicago, continues to trade in a sideways consolidation pattern, giving little hint as to the next move. It is a wide range of 90 cents to $1.00 per bushel. A breakout above $9.60 or below $8.60 should set the stage for the next significant move in Minneapolis wheat. With world ending stocks exclusive of China at a 15-year low, and with spring wheat stocks also the lowest in 15 years, one would have to assume that any breakout of the sideways trend, is more likely to be up than down. We'll have to wait and see that outcome.
Comments above are for educational purposes and are not meant to be specific trade recommendations. The buying and selling of grain and soybean futures involve substantial risk and are not suitable for everyone.
Dana Mantini can be reached at Dana.Mantini@DTN.com
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