Disappointing exports weighed on grains and soybeans Wednesday
The corn market recently bounced because traders thought last week’s drop to five-month lows would spark improved export demand. Thus, futures reacted badly Wednesday when the latest Export Inspections report showed last week’s sales fell short of the week-prior total. One might reasonably argue that the price drop was too recent to have initiated the expected, reaction, but traders were also facing a negative reaction to the currency situation. That is, the U.S. dollar reached a two-year high versus the Japanese yen. This seems indicative of its relationship with several Asian currencies, so it was not terribly surprising to see the grain and soybean complexes react negatively to the news. The fact that bulls could not sustain the December 21 bounce back above the $7.00/bushel level probably inspired technical selling as well. March corn ended the day 11 1/4 cents lower at $6.93/bushel and December fell 8 1/2 cents to $5.98 1/2.
The weekly Export Inspections data seemed much more favorable for soybeans than they did for corn, since the latest figure (at 44,486 bushels) topped comparable week and year-ago totals. Moreover, the year-to-date results are far above those posted over the same 2011 period despite the substantial price increase experienced in the interim. Moreover, sizeable Christmas rains could once again delay Argentine soy plantings, thereby implying a diminished 2013 crop. Nevertheless, soybean futures fell rather substantially in the wake of the weekly inspections report. U.S. dollar strength and slippage in the equity indexes may be weighing upon the legume market. January beans fell 15 3/4 cents to $14.24/bushel, while January soyoil dropped 0.53 to 48.41 cents/pound and January meal tumbled $4.9 to $429.9/ton.
As in the corn pit, wheat traders have recently expected slumping prices to boost exports, but the weekly Export Inspections report indicated a disappointing wheat sales total as well. Negative post-Christmas financial market trends (i.e. U.S. dollar and energy price strength and equity index losses) probably depressed golden grain values. We would also point out that bulls proved unable to mount a sustained challenge of chart resistance around the $8.00/bushel level (basis March CBOT futures) over the weekend, which more than likely encouraged fresh selling. Trader interpretations of recent technical movements will probably determine their short-term bearish expectations. Some likely think the $7.75 low marked a significant turning point, whereas others may be expecting a drop all the way to $7.60. March CBOT wheat closed 11 1/2 cents lower, at $6.92 3/4, on the day; March KCBT wheat fell 18 3/4 cents to $8.25 3/4 and March MGE futures slumped 13 1/4 cents to $8.68/bushel.
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