Can December Corn Extend This Rally?
Monday's (Oct. 10, 2022) rally in December corn above the recent high, at $6.99 1/2, could result in a larger move to the upside. A solid close above the $7.00-level is likely to result in an acceleration of the rally. Momentum indicators are positive, and December is currently trading well above key moving averages. It doesn't hurt that many analysts expect Wednesday's October WASDE report to result in lower yield and production, sending carryout down to a tight 1.1-billion-bushel level.
One major obstacle in the way of this extended move would be the current demand situation. As U.S. corn has recently been undercut by cheaper Ukraine and South American offers, and exports are down 50% versus a year ago, the new escalation in the war from Russia may put an end to Ukraine's ability to export corn. On a move higher, the next level could be as high as $7.28 -- an open chart gap.KANSAS CITY JULY WHEAT FUTURES:
Kansas City new crop July futures, early on Monday, vaulted above recent highs to reach the highest level since June. A combination of the still extreme-drought conditions in the southwestern Plains hard winter areas could get some much-needed relief next week. However, weather analysts have said that it would take a much more substantial 9 to 15 inches of rain to cure the soil moisture shortages.
Momentum indicators are neutral to bullish still, and there is very little in the way of significant chart resistance above where July is trading ($7.05) on Monday. The weekend escalation of fighting in Ukraine has made it very possible that Ukraine safe shipping zones may be compromised, and Ukraine's own winter wheat seeding is expected to possibly be down as much as 50% due to a lack of funds and Russian occupation. The ceasing of Ukraine's export ability would surely be positive for U.S. wheat export demand, with sales still down 4% versus a year ago.NOVEMBER SOYMEAL FUTURES:
November soybean futures rallied sharply on early Monday, but is giving up gains, as strong product markets have also backed off. The soy chart remains in bearish mode, with the 20-day moving average now threatening to move below the 50-day average, typically one trend change indicator. Some analysts expect that the WASDE report on Wednesday could result in a small decline in yield. However, the recent upward revision in ending stocks has been bearish for soybeans.
November beans could go either way, but probably a rally and close above $14.20 is needed to get bulls excited, while there remains an open chart gap just below $13.50, which would be the target on a resumption of weakness.
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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