Corn Fundamentals: export demand remains positive. Demands for ethanol production has reduced profit margins and without subsides are likely running in the red. Old crop corn futures may be vulnerable to a wheat futures sell off. Allendale is aware of the healthy corn crop in the southern hemisphere, which Brazil will begin its harvest in the month of February, Argentina in March and South Africa in the month April. March corn has immediate technical support at 4910 and resistance at 5180, trend is range bound. Monday's close below key short term Moving Averages is technically bearish. December corn futures have technical support at 5130 and resistance at 5360, so feel the trend is range bound. Allendale is neutral to bullish corn futures as world ending stocks remain tight along with sister starches of rice and wheat. With corn's tie to wheat futures and technical neutrality, for the short term we prefer to sell rallies as opposed to buying against technical support.
Soybean Fundamentals: too wet in the key central west region of Brazil, but the balance of South America is viewed as beneficial to both corn and soybean crops. The currency spread between Brazil and US suggests a smooth transition between old crop US soybeans and new crop Brazil supplies. This transition is expected to become more noticeable by late February to early March. March soybeans have immediate technical support at 12910 and resistance at 13750, trend is range bound. November soybeans futures technical support is 12540 and resistance of 13150, trend is also range bound. Allendale is neutral to bullish soybeans, tightening domestic and world stocks are fundamentally bullish to soybean futures. However as the South American crop harvest approaches and a relaxing Brazilian Real versus the US Dollar suggests a smooth transition from US supplies to S American as we approach the month of March.
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