Corn Is Cheap, but..

December corn is fundamentally weak and holds the potential of a significant break lower if USDA increases the national average yield in the November Supply and Demand report. First support on the daily charts is 345. A close below 345 sets up risk of a trade to long-term support on the weekly charts of 301. You should expect penetration of the 345 support if we get bad news, for corn in the November report. Regardless of the bearish tone in the corn market farmers are content to fill bins and keep corn off the market as harvest winds down. The stubborn holding of corn should lend itself to a seasonal low in corn and a subsequent price rally albeit one that will be short lived and rather modest.

December 2018 offered some hedging opportunities this week as that contract traded $4.00, 50 cents above the 2017 contract value. Corn farmers should pay close attention to that contract and to the carry that the corn market is offering. Support in the December 2018 contract is 386, resistance is 403. Target sales at 403 and 417. The contract high, 429, is out of reach and does not come into play at this time.

November soybeans have support at 975. Resistance at 997. Like corn, the November Supply and Demand report will play significantly in price going forward. If USDA leaves yield unchanged or drops it even a fraction of a bushel like they did in the October report the stage will be set for a move higher in soybeans. In such a scenario a test of the contract high, 1040, would be expected.