MARKET UPDATE

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Futures Prices Close

Overview

Very volatile day today. Grains opened up really strong, but quickly fell off the early gains then continued to fall, trading well in the red but bounced nicely into the close.

At one point today:

March Corn was up +5 to $4.58 1/2 (Closed at $4.52)
March Beans were up +15 to $10.04 1/2 (Closed at $9.92)
March Wheat was up +8 to $5.55 (Closed at $5.48)

Disappointing price action as we closed well off the highs, but grains all closed well off their mid-day lows as well.

Corn did post an outside down day. Taking out the previous days highs and closing right at the previous days lows.

This can often signal a reversal. But we did bounce nicely off the lows.

The main headline this morning was the dryness in Argentina.

This had both soybeans & bean meal rallying hard this morning despite fading off the early highs.

It appears that Argentina is going to lack rain for the next few weeks. As they are only expected to receive half the normal amount of rain the next 2 weeks.

After New Years, they are only scheduled to get one rain until mid-January.

If the forecasts stay this dry after New Year's, maybe we get a rally in beans and meal.

Next 2 Weeks

Next 30 Days

Argentina has been drier than usual as well.

For the past 30 days Argentina corn & bean areas have only received 72-74% of normal precipitation.

The market quickly sold this news this morning, but it is still something to keep an eye on.

Argentina is the worlds leading meal exporter.

So if this dryness continues, it could spark a little weather scare in mainly the meal and bean market.

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So if you'd like to talk through your operation, please feel free to reach out to us. It doesn’t cost you anything. We'd be happy to help.

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Today's Main Takeaways

Corn

Demand remains very strong for corn.

Exports are still up +30% compared to last year.

Some are still saying: "Oh this demand is front ran in anticipation for Trump"

It is becoming more and more clear that this is likely not the case.

Exports have continued to be strong.

The USDA raised it's export estimates recently when they historically do not so at this time frame.

The USDA is convinced this export demand is here to stay.

Chart from GrainStats

Ethanol also continues to impress.

We are currently +4% ahead of last years pace.

The USDA projects us to only be +0.4% higher vs last year.

Even if we can’t completely sustain this big +4% edge, it is still a very friendly factor with the potential for the USDA to bump ethanol once again.

Chart from GrainStats

Overall, demand continues to be the story as I've stated for months it would be.

Long term I do still think we have potential. I am talking spring/summer time frame.

Short term, I mentioned on Friday we were very likely going to see a local top soon.

It appears we could’ve very well put in that local top today.

How did I identify this as a potential local top?

Two simple indicators. The stochastics and the RSI.

First the stochastics, they were overextended and begun to cross bearish (blue crosses below orange)

The stochastics have marked pretty much every local top in corn as of recent. (highlighted by the purple vertical lines)

On Friday we posted bearish divergence on the RSI (relative strength indicator)

This happens when prices make a higher high, but the RSI does not.

This signals that a market is losing it's upward momentum.

Moving forward, I personally think we find a bottom somewhere in this green box.

Likely between $4.47 to $4.44 (Our 50% to 61.8% retracments of the recent rally).

We do not have to go that low, for all we know today could’ve been the bottom as we did bounce right off the 200-day MA and the 38.2% retracement level from the recent rally. (Technically low enough for a correction).

However, the stochastics still have room to come down and we did post a potential bearish reversal.

If you did not take advantage of our Dec 11th sell signal, get caught up if you have something to move in the next several months.

Keep in mind, we are sitting at 6-month highs. That is something to reward.

If you did take advantage of the sell signal, or have plenty of time on your hands, my next target to take risk off the table is $4.67 (161.8% golden fib extension of the $4.25 to $4.51 rally)

(If you missed Dec 11th's signal: Click Here)

Corn 2015 Comparison

I do not think this happens, but it is just a reason why you want to take risk off the table when we get opportunities.

What if this was the highest prices we will see a for while? I do not think that is the case, but it is a question you have to ask yourself when marketing.

Here is a comparison for March 2015 corn vs March 2025 corn.

They are awfully similar. March 2015 corn we put in it's highs on Dec 29th and continued lower for a few months.