Commentary
Index fund rebalancing to start 2024 perhaps prompted some profit taking on turnaround Tuesday. Short covering by heavy net short trend and index following funds highlighted the trade in corn and wheat today in my opinion. March Chicago wheat traded and closed below 6.00 finishing yesterday’ session just below key support at 5.97. However, we held last week’s swing low at 5.91 and fund profit taking coupled with some spec buying aided a 13-cent rally today. A severe cold snap is due for the US winter wheat belt this week through early next week across the Midwest is forecasted highlighted by subzero temps have given thoughts to some winter kill in both soft red and hard red winter areas. That said, snow is expected to insulate most of the crop from most of the problem. US export values continue to remain outside of the reach of Easter European offers. Had the cold front showed without the snow cover, we would have seen funds short cover more aggressively. Simply put, without either increased demand for US origin or a supply side weather scare, this market remains somewhat range bound. Winter wheat will get updated seeding reports on Friday. The average trade guess is 35.1 million acres of winter wheat sowings. That puts acres down 1 million with the declines coming from 600K less KC and 300K less Chicago. The average trade guess for on farm stocks at 1.37 billion bushels is seen as neutral in my opinion. Weekly continuous chart below. Support is 5.97 to 5.91. A close under this week and its 5.82. Resistance for March wheat is at 6.28 and with a close over 6.40. A close over 6.40, and I look for the market to trade to 6.58/6.59.
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