BEANS RALLY & CORN HOLDS OFF NEW LOWS

Written By Sebastian Frost

WEEKLY WRAP

Futures Prices Close


Overview

Great ending to the week for bulls, as all of the grains rally. Led by a +23 1/2 cent break out in soybeans and as corn fought off to hold those harvest lows, bouncing exactly off those old lows before rallying back a dime.

Why were grains so strong to close out the week?

Overall, it was mainly South American forecasts. We have been saying this is the biggest factor going forward, and has the ability to push corn and beans much higher.

Before we dive into today's update, let’s take a look at what some others in the industry are saying:

Mark Gold from Top Third:
"The weather in brazil is certainly iffy for the corn market. They are gonna have trouble replanting second crop corn, first crop corn is gonna be drowned out in a lot of spots. I just can’t see getting bearish down here in the corn market."

Jeff French - Futures Trader:
"Lot of air up here on the bean chart. January beans could easily rally to $13.90 and do it quickly."

Farms.com Risk Management:
"Corn futures could have found bottom as South American crops are off to their worst start ever."


Here is how the prices shook out this week.

Big bull run in the beans, as even the November contract is back well over $13.

With today's gains, believe it or not, corn only lost 3 cents on the week despite what fell like a week full of down days.

Weekly Price Changes:

Today's Main Takeaways

Corn

Corn barely fights off a new low, as we bounced exactly off of $4.68 before reversing a dime off of those lows.

Still 30 cents off those $5.09 highs from October 20th, but today was a good sign. If we would have broken those lows, it would not have looked good on the charts.

As mentioned, South America is going to be the ultimate factor. Brazil's rainy season is now officially a month late.

What's that mean? It means that growing season for their second crop corn will be a month shorter.

From Wright on the Market:
"Farmers and agronomists have become voval about giving up on growing two crops this season and switching to cotton. The remaining growing season is too short for a good crop of beans followed by corn, but plenty of time to grow cotton, which requires  a longer growing season than corn or beans."

So this Brazil weather isn’t going to just damage the crops. It is going to cause less acres. Less acres means less supply. Less supply with unchanged demand typically leads to higher prices.

We have been saying all week that there was a good chance we tested those harvest lows or perhaps even broke them before reversing higher, because that is what the funds and algos do. Push us up into resistance, then back down to support. What's next now that we have done that?

They will…..

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INCLUDED IN TODAY’S UPDATE

  • Where we see corn going from here

  • Managing risk with the bean rally

  • Where is the upside in beans? Upside targets

  • What’s the wheat story?

Sebastian Frost
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BEANS CONTINUE BULL RUN AS HARVEST WRAPS UP
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EVENING THE PLAYING FIELD