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Corn, soy close higher

Updated: 01/10/2011 @ 1:29pm

CHICAGO, Illinois (Agriculture.com)--Though a sell-off occurred on the close, corn and soybean prices stayed higher, wheat lower Monday.

The March corn futures settled 12 cents higher at $6.07. The March soybean contract closed 16 1/2 cents higher at $13.81 1/2. The March wheat futures settled 6 3/4 cents lower at $7.67 1/4. The March soybean meal futures ended $7.90 higher per short ton at $370.60. The March soyoil futures closed $0.31 higher at $57.13.

In the outside markets, the NYMEX crude oil is $1.08 per barrel higher, the dollar is lower, and the Dow Jones Industrials are down 52 points.

As they do each year, the index funds are in the process of rebalancing their portfolios. In doing so, the grain trade expected nearly 110,000 contracts to be sold off, starting last week and lasting through this week. Because the index funds are 'long' the grain commodities, the trade expects the funds to shed grain investments into energy sector contracts.

Joe Bedore, FC Stone's CME Group floor manager, says that if the index funds rebalance the same today as they did Friday, this market can sustain its rally.

 On Friday, the index funds sold off just 2,500 corn contracts, in the pit, while the traders expected between 7,000-10,000, Bedore says. Even more contracts were expected to be sold off electronically. The market just didn't see it.

"If that's the case, we are going to stay mildly strong. If that number grows today, and gets bigger on rebalancing, we are going to break real quick," he says. 

Secondary, Argentina's corn weather is headed back up to 100-degrees with no rain for 7-days, according to recent forecasts. 

"Our people in Argentina say 25% of the corn crop is already lost. So, we are not going to break too far," Bedore says.

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