NEXT WEEK WILL BE KEY

Written By Sebastian Frost

WEEKLY WRAP

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Futures Prices Close

Overview

Solid price action from the grains to close out the week.

Wheat rallies, up +25 cents the past two sessions and despite us selling off hard to begin the week, Chicago ends the week down just -2 cents.

Beans close +15 cents off their lows to end the day slightly higher. Closing +12 cents higher on the week.

Corn higher today but remains in it's extremely tight range, as we traded in just a 10 cent range the entire week.

Often times when the market trades in a super tight range, it happens just before a break out to either direction. So perhaps the market is preparing for a big move.

Weekly Price Changes:

Something to keep in mind is that we essentially have one more full trading week left in the year because of the holidays. So expect some thin and volatile trade to close out the year with less traders.

The dollar reached 5 month lows with the Fed announcement yesterday. The dollar getting hammered is supportive of grains and helps out our exports.

China continues to buy soybeans. As we had yet another sale this morning. Marking 8 straight says of export sales, with 6 announcements this week alone. This week we had the best overnight sales for soybeans in over a month.

The market has been slightly disappointed that we didn’t get a continuation of wheat sales to China following the recent swarm of them.

Rumor is.. China might be on the hunt for a lot of US corn.

We had the NOPA crush report out today, it showed a record crush for the month. This was friendly for the bean market.

The biggest thing is of course going to be Brazil. So far, the reaction is mixed. It looks very hot and dry for the next week, but they continue to add rains into the forecast 6 to 10 days out.

Here is the forecasts

However, this isn’t anything new. The forecasts have continued to add rains 6 to 10 days out time and time again, only for them to disappoint or disappear completely. Anything past 5 to 7 days out has been anything but reliable.

November in Brazil is like June in the US when it comes to importance for growing. Even though yes it's important, it is not the key time frame.

The absolute key period for growing in Brazil the middle of December into early January.

Which is right now. Next weeks rains will be extremely crucial for the future of their crops. If these upcoming rains miss, they will be in for a big problem. Not only do they need these rains to hit, they will need a continuation of rain and a full on trend change.

Brazil's fate could very well come down to these rains next week..

Why is next week so important? Just look at how historical their current drought is. Rain makes grain. No rain makes no grain. They absolutely need rain, soon.


Here is the temperature anomaly the last 60 days. Temps have been very hot, 5 to 15 degrees above average the entire growing season so far.


Now this next chart is an eye opener as to how drastic this lack of rain has been. Just look at December.

I believe the corn situation is being undervalued here. Here is why…..

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In today’s update we go over exactly why this Brazil corn situation is flying under the radar. Why next week will be a key factor for our markets. What others are saying. We take a look at corn history. We go over exactly how much upside our bean market has. (Someone has a near $16 target, is this possible?) We go over our long term outlook, ways to manage your risk in all the markets & more..

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sfrost@dailymarketminute.com

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Sebastian Frost
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