MARKET UPDATE

You can scroll to read the usual update as well. As the written version is the exact same as the video.

Timestamps for video:

Corn: 4:21min

Beans: 7:02min

Wheat: 9:36min

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Overview

Grains all in the red today. Outside of simply hitting resistance on the charts and being technically overbought in corn. What was the main reason?

Argentina Cuts Export Taxes:

The biggest piece of news and reason for the brutal sell off last night was Argentina deciding to cut their grain export taxes.

This helps the Argentina farmer sell their beans and creates more competition for the US on the export market.

That is why this is a negative headline.

Why did Argentina do this?

The said they did this because their economy is doing better and they are trying to relief the ag sector that is facing drought and low crop prices.

These tax cuts now make Argy soybeans cheaper than the US Guld on FOB basis. But Brazil still remains the cheapest.

US corn still remains the most competitive.

How negative is this?

Well it is not a friendly headline, but at the same time the market is still concerned about the drought Argentina is facing.

If their drought was one of the reasons for this, it must be causing some issues.

So this has some wondering that how much competition we are even going to see from Argentina if their drought continues.

Is the Argy drought a big deal?

While this drought is a supportive factor and helps add a floor underneath this market, it is probably not some game changer that is going to spark a major rally as Brazil still has a record crop either way.

If Brazil didn’t have a monster crop this would be a bigger deal.

But it is a good part of the reason for the recent soybean rally.

Here is the Argy soybean ratings.

They are rated just 22% G/E, down from over 30% last week and last year's 44%. (This year is red line).

The Funds:

The funds are now long 312k contracts of corn.

Their largest positon since May 2022.

The funds wouldn’t randomly go from record shorts to their largest long position in 3 years for no reason would they?

This is a loftly long and we do have to be cautious that they could soon run out of reasons to buy at this rate unless we get another catalyst. Another reason why I wouldn’t be surprised to see this market take a little cool off soon (which I touch on later in today's update).

But they don’t have a reason to simply bail.

Chart from GrainStats

The funds are still long 40k contracts of soybeans.

Last week they got long for the first time since December 2023.

Chart from GrainStats

The funds are still short the entire wheat complex:

HRS: -27k
HRW: -35k
SRW: -91k

Chart from GrainStats

Other News:

Soybeans were hoping we could get some demand news following China halting the imports of 5 Brazilian export firms. But just like I mentioned Wednesday, this only looks like a short term issue. As both China and Brazil said this is likely only a minor issue.

Mato Grosso's harvest is moving at it's slowest pace since 2010/11 due to too much rain. Sitting at 4.2% complete vs the 5yr avg of 13%.

I don't think this is a huge issue for the bean crop, but it could cause some issues for their second corn crop. As it is going to delay that crop.

Tidbit: The world corn stocks to use ratio (excluding China) is the tightest since 1995 sitting at 7.9%.

Today's Main Takeaways

Corn

Yesterdays Sell Signal:

Yesterday we alerted a sell signal for old crop corn & soybeans.

Listen to Yesterdays Signal: CLICK HERE

Why?

Well for starters corn specifically is very overbought. The most overbought it has been since May 2024.

Corn is also nearly +90 cents off the lows. Why wouldn’t someone reward that magnitude of a rally?

We also hit my $4.85 target a few days ago and are struggling with this $4.88 resistance.

We also hit my very first target for Dec-25 corn and posted 7-month highs.

The 50% retracement to our May highs at $4.64

Seasonally this is also the time of year where we could simply struggle and perhaps take a breather.

Am I saying corn is going back down to $4.00? Absolutely not. I think our downside is limited.

If we correct, I am looking for a bounce in the $4.65 to $4.72 area. (the 50% to 61.8% retracement levels of this recent rally).

Realistically, corn could even fall all the way back down to $4.50 and the point of breakout from this asending triangle and still be completely fine from a technical standpoint.

(the arrows are just to show you how the chart would still be bullish if it happened)

Long term my bias still leans higher but I wouldn't be shocked to see us get a correction here.

If we look here, we got a golden cross on March corn.

This is one of the most popular textbook bullish indicators when taking a longer term perspective.

When the 50-day MA crosses the 200-day MA. It usually signals a market shifting from a bearish one to a bullish one.

$5.37 is my big picture target for now. As it the 38.2% retracment level up to those 2022 $8.24 highs.

Continous corn also posted it's first higher high since those $8 highs. A possible trend shift underway here.

Soybeans

Soybeans are not as overbought as corn, but also do not have as much fundamentally going for them with the bearish global balance sheet.

This is also the time of year where soybeans seasonally struggle. When Brazil's crop comes online it almost always adds some pressure.

We have a monster Brazil crop entering the market soon.

So just like corn, I wouldn't be too surprised if we saw a short term correction.

Here is the 5 year seasonal.

Usually we make our late year bottom at the end of Nov, but this time we made it at the end of Dec. So perhaps this seasonal correction could be later than usual just like the bottom was.

As usually, we top get a correction in early/mid-Jan then form another bottom right about now.

This could also partly be due to Brazil's harvest only being less than 5% complete. Delaying that product hitting the market.

If we take a look at this continuous chart. We are approaching a pretty significant downward trend from 2022.

If this is the start of a correction, we need to hold the golden zone to remain an upward bias ($10.20 to $10.30) (50-61.8% retracments of recent rally).

This would also coincide with a test of the 100-day MA (purple line)

We rejected off the 100-day MA quiet a few times, then on last week's pull back we bounced right off of it. Hopefully we can see this shift from resistance to new support.

If the golden zone fails, that red line is the last defense of support we must hold.

My next targets for new crop beans are still the 50-61.8% retracements levels of the May highs.

$10.82 and $11.11

As we are currently hovering right around the 38.2% at $10.53

Unless we bust above this level, I could see us just simply be range bound between the 23.6% ($10.18) and 38.2% ($10.53) fib levels.

Wheat

There really isn’t too many bearish headlines surrounding wheat yet it continues to struggle.

SovEcon released their new estimates for the Russian winter wheat crop.

They think this will be the smallest crop since 2021.

Russia dominates the global export market. So this is a big deal.

Bottom line, there are several reasons why wheat is undervalued even if it takes a while for the market to treat it as so.

The global stocks to use ratio for major global exporters is the lowest since 2008.

Russia has one of their worst winter wheat crops on record.

Still have zero interest selling any wheat down here.

Looking at the charts, we finally broke the downtrend from last May. So a great sign hopefully of things to come. Just want to see us continue to hold that $5.29 support.

Looks like KC got a failed breakout.

Need to hold that green box.

Generic Cash Sales Tracker

Due to requests here is our generic cash sales trackers.

This does not include any hedge recommendations etc. Simply cash.

This is futures prices.

For old crop there is no percentages as we only recently started tracking our generic sell signals. Future new crop sales will have percentages as we continue to make sales.

This will be included at the bottom of every update.