Grains were Mixed in the Overnight

In grains, yesterday’s meltdown was largely triggered by the destruction of oil prices that sent crude to a 7-year low on Monday. Corn did have some positive news on Monday as USDA announced Mexico bought 115,000 MT of US corn. But, other news was mostly neutral as weekly export inspections showed corn and wheat in line with trader expectations while soybeans was at the high end of expectations.

Jan soybeans ran right to the 9.00 to 9.10 resistance area. Then turned tail selling off 24 cents on the day creating an ugly outside day down reversal. Look for support at 8.80 to 8.75. The 50% retracement of the last rally is 8.77.

Analysts expect USDA to raise its forecasts of U.S. 2015/16 wheat and corn ending stocks, according to Reuters poll. Average estimate of what USDA will show for U.S. ending stocks of wheat: 918 million bu (range 0.910-0.936; Nov 0.911). Corn: 1.768 bln bu (range 1.640-1.810 bln; Nov 1.760 bln). Soybeans: 0.462 bln bu (range 0.445-0.478; Nov 0.465 bln).

China's total grain output rose by 2.4 percent in 2015 to 621 MMT from last year, the country's statistics bureau said on Tuesday. The combined output of grains including rice, corn and wheat increased 2.7 percent to 572 MMT, it said. The corn crop came to 224.6 MMT, showed the data, with average yields of 5,892 kg per hectare. Output is up 4 percent from 215.67 MMT last year.

Oil prices temporarily rallied on Tuesday with news that China's appetite for cheap oil was helping to support prices as the government looks to build up strategic reserves. China's crude oil imports for the first 11 months of the year rose 8.7 percent to 6.61 million barrels per day, with November crude imports growing 7.6 percent from the same month a year ago. But, OPEC has lost control of the oil market and unless something fundamental changes that causes demand to overtake the oversupply in the market, the path of least resistance is the 2008 lows in the mid-$30 range.

The risk of trading futures, hedging, and speculating can be substancial. Grain Hedge is a dba of Foremost Trading LLC (NFA ID: 0307930)