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Market Thoughts 11.27.22

Dec corn gained exactly one tick, 0’2 this week to close at 668’0. Corn posted an inside range during holiday-shortened trade with a high of 669’6 and low of 655’6. Jan soybeans also posted an inside week, topping at 1448 with a low of 1417’2 and closing up 8 at 1436’2. Dec spring wheat closed up 5’6 at 957’2 for a second straight small weekly gain.

Subdued trade during the holiday week with no major new fundamental developments and modest advances for all three commodities keep our opinion from that past two weeks intact. To recap, we expect grains to trade sideways/lower through the winter with very low probability of a major rally. The Nov S&D report is now three weeks into the rearview and with it no longer any potential for bullish U.S. supply news until next growing season. Seasonally, the very few analog years that featured prices this high at harvest did not follow that up with price rallies during the winter. Fundamental news was somewhat muted this week but China is again imposing Covid lockdowns, a U.S. class 1 rail strike still looms and South American weather continues to be good enough. All three grains had excellent export sales this week, making it two straight weeks for corn, and basis values remain unusually strong. But none of this is enough to change our opinion at this time.

Week 4 of the same theme – charts illustrating the warning signs for grains, especially new crop 2023…

Dec 2023 corn tracking incredibly close to Dec 2013 thus far. And as we’ve been noting, Dec 2013 never did post any sort of rally from this point forward and collapsed back below 400 by harvest 2013. Dec 23 corn is still within 25 cents of its recent highs and at levels that represent significant profits; should be considering the marketing opportunity (and potential risks associated with not doing something) here.

Also not helpful – Crude Oil continues its collapse in spite of recent OPEC+ cuts. Crude has followed a very typical bull market patter in 2022 – spiking to multi-year highs on event news (Russian invasion of Ukraine) before quickly falling bnack down, then making an orderly rally back to those spike highs, but failing to break through resistance. And since then, a now nearly six month downtrend, with new lows being made again this week.

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