While beans and meal continue their upward surge on dry Argentinean forecasts, corn continues to plod along establishing a new high print before settling back 2 to 3 cents from each high made. We have discussed a bullish case for corn in the long term for a myriad of reasons. (Chinese demand, lower potential US plantings, lower South American production). I wouldn't be surprised if some back and fill emerges in corn at these levels despite beans and meal being bid. We have seen some unwinding in both KC and Chicago wheat vs. corn the last few sessions since the Sunday night/Monday surge higher in beans and wheat. The unwind has held corn up vs wheat as short covering in both Chicago and KC wheat outright contracts has dried up for now with managed funds now long KC wheat while cutting their massive short in Chicago appreciably. While further back and fill is possible in wheat, any major sell-off wouldn't occur until winter wheat crop ratings are released near month end in my opinion. Still though the charts look to me as if corn may still be favored vs wheat here and I will give some trade recommendations with stops below. For instance if Chicago March wheat can't hold the 451 level, look to sell the march wheat/corn spread at 89 over with an objective near 80, then 72 over. KC wheat over Chicago wheat could be in buy mode again as well. The KC/Chicago (May 2018) intra-market spread rallied from parity to 1.6 cents KC over to 27.2 cents. In the last week it pulled back 13 cents ( approx. 50 % retracement). Look to be a buyer at 14 over with a tight stop of 4.4 cents. If all wheat classes fall from here , I think Chicago has the most downside as the perception in the market will be the soft red winter (Chicago contract) crop condition is not as dire as the hard red winter (KC).
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