Grain markets on the Chicago Board of Trade can do weird things over the Thanksgiving holiday. Market moves can be skewed by the effect of a nonofficial four-day weekend.
That is, traders have a tendency to even positions and go home Wednesday, and then stay away until Monday trading. The market is open Friday, but the trading is always suspect.
This holiday was a good example of this, as trading was higher Nov. 27, with March corn futures up six and a quarter cents, and January soybean futures up almost 8 cents, at $11.913⁄4. Then, markets were sharply lower Nov. 30, as all of the traders came back to town.
March corn futures actually made a new high of $4.391⁄2 Nov. 30 in the night session, and then traded lower all day, closing down almost eight cents at $4.26. January soybean futures traded near the high, at $11.99, and then closed down 21 cents for the day at $5.85. January futures had previously made a new contract high at the magic even number of $12 Nov. 23.
We had prices several cents higher Dec. 1, perhaps as a bounce from the previous day’s losses. Thosegains moderated, so that at 8:30 a.m. we were just a half-cent higher on March corn futures, and just one and a quarter higher on January soybeans.
The market is showing signs of needing news, as it trades near the recent highs. As I have said before, these highs are what we call “contra-seasonal,” which is to say that they go against the natural flow of grain price changes.
Normally we see lower prices at harvest. With much of the year to go, we are struggling with the difference between government balance sheets of supply and demand reports, and with the traders assumptions of the market. The traders are focusing on the fact that we are way ahead of the government’s expected pace of corn and soybean exports.
Part of that is because we normally don’t sell a lot of corn to China, but we have. Part of that is because we have sold over 70% of expected soybean exports to China, but the marketing year is only starting December. Moderating that view is the long-held assumption that China would buy a heavy percentage of the soybeans at harvest, so maybe that is all that we have seen, and further sales will be small.
The direction of the market is now a big question mark. It was a big deal that we got to the psychological number of $12 in soybean futures. It is also significant that it held as a high, with further highs of $11.981⁄2 Nov. 25 and $11.99 Nov. 30.
If there were more time between highs, we would be looking at this as a triple top, a strong formation that resists higher prices. With the three highs close together, maybe they just constitute one high. I am not enough of a strong technician to know. I do know that we are now significantly higher than we expected to be all year, with only three months of the marketing year gone.
We may be seeing the best sales opportunity of the year already. We may be seeing the middle of a larger bull market. We will know for sure when it is too late to react, just like usual.
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