Afternoon Corn and Soy: Limp Friday finish, strong weekly closes

Afternoon Corn and Soy:  Limp Friday finish, strong weekly closes

Overnight enthusiasm was abundant, particularly in beans, though the day session ended up being more two-sided. Soybeans traded as much as 20 cents higher, though most months were lucky to manage 5-6 cent higher closes in the end. Corn finished steady to a penny better, which was toward the middle/low end of a seven-cent range. Meal (up $1) gained a little on oil (down 15 ticks). Official weekly closes were positive across the board; corn gained 13 cents, beans a whopping 39 cents, Meal over $6, and oil gained 150 points (or 4%). All four closed into new recent highs. Cash trade was mostly steady Friday for both corn/soy with a slightly weak undertone.

CFTC Commitment of Traders data for the week ended Tuesday (11/17) was a little surprising in that it found spec funds were less aggressive buyers than expected for a second week. For corn, large non-commercial (aka "fund") traders held their net position about steady, with a continued mixture of small long liquidation and a few new shorts. Funds appeared to take some profits in both bean and meal longs, while adding back on a little oil length. Heading into the weekend, we estimate funds are net long roughly 290,000 corn, 200,000 soy, over 65,000 meal, and almost 90,000 oil contracts.

South American weather remains the primary market-driving focus. Most would agree it is a mixed bag; recent rains in Brazil were beneficial, but it will be a dry week ahead. Precip is expected to return across the broad region (including Argentina) starting next Wednesday, but the market appears to want to see the rain drops fall before relaxing much. Argentina is dryer net/net, but also arguably has more of a window to plant/re-plant, as they are only about one-third done in both corn and soy. Brazil is farther along at roughly three-fourths planted. Northern hemisphere harvest is wrapping-up; the USDA is not expected to update their corn or soy harvest tables Monday. South African corn planting is said to be in good shape.

Export interest feels like it is shifting toward corn, which makes sense as most of the U.S. soy exports are effectively spoken for at this point. There were a couple 8 AM corn sales today; 158k to Mexico and 131k to 'unknown'. South Korea continues on their recent buying spree; they picked up yet another 268,000 metric tons of corn for May ship overnight, paying nearly $242/mt C&F. At this point, U.S. corn is believed to the be most competitive in the world for 'size' orders, which should help spur optional origin business.

Elsewhere, end-user markets closed out the week a little better after a rough Thursday. Hogs were the big winner, adding $2 today for late winter positions, while dairy and ethanol both bounced back a little. Cattle were mixed, leaning weaker. Cattle on Feed report after the close found a few less animals around, which could positively impact that market Monday (while reducing corn feed expectations?). USDA found 'on feed' inventory 1% above year ago (market looking for +2%), while Placements were seen 89% of year ago (vs. 91% expected). Ethanol, broiler, and dairy margins are leaning negative.

Today was mostly a 'bear spread' day, with Jan beans taking the brunt of the damage. As noted above, export interest is likely shifting more toward corn, reducing prompt demand a notch. Palm Oil futures were weaker overnight, which weighed on oil. Meal was a minor toggle, gaining just a little ground today. Corn lost a little ground to both beans and wheat.

In options action, volatility in both corn and soy was firm to start, but cooled-off once the rally did. Dec options expired today with little real controversy. "The Strangler" has been busy in Jan over the past couple days. Players paid 14 ½ cents for 800 July $5 Calls. ATM Jan Corn puts were popular sales. 900 Nov '21 $12 Calls were sold at 31 cents early, delta neutral against futures.

Technically, we see $4 as important psychological support for corn. Tough weekly chart resistance looms in the $4.40 vicinity. Daily and weekly momentum indicators for corn remain positive, though the weekly chart is a little over-extended. Soybean momentum appears to be waning as the market has struggled for a few days to close at the top-end of its range. Beans face tough weekly chart resistance in the $12 area. Jan beans feature initial support just above $11.50, with much more sturdy levels seen closer to $11.