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Funds take fat profits-Tim Hannagan
Reports give and reports take. Last week gave us the rally we called for into the big June 9 USDA monthly crop report.
December corn, on the week, rallied from a Monday, June 6 low of $6.64 to a report day high of $7.22 or $.58. But the length of the rally was actually $1.06, as it began May 12th at $6.16. So, as is the case , we called for after the report, a profit-taking break is next.
We saw the $7.22 high from last week give way to a low of $6.47 this week or $.75. This the break this week though expected was fair considering a one dollar plus rally, as funds fat with profits had plenty of time before re-entering long again into the June 30 final planted acreage report. The rule of thumb is we have a 35 to 50% percent correction of a rally. This week's was a little bit more.
When we come in Monday, there will be eight days prior the June 30 report to get into position. Most of the large fund money waits for the 3-to-5 days prior the report to enter long. But, speculators and large traders will be looking for that chart-low to price in their positions and get in early.
Weather looks to remain wet across the upper planes and Midwest into early next week. This will keep old-timers saying "rain makes grain" and it looks good for crops. But, the reality is the rain is detrimental right now in a lot of areas. Sunday through Monday will bring up to 3 inches across Iowa into Illinois, with up to 4 to 8 inches in the upper Plains. This will further talk of ponding in pooling of the low land areas and flooding of rivers.
We need warmer days and nights to improve crops as well, as less rain to a more normal level. That will come eventually as July enters. The near-term weather looks to encourage talk of a bullish June 30 acreage report. Technicals read like this; December corn has minor support at 6.55 entering Friday. A close under and 6.34 is next. July support is 6.88. November soybeans support, as we entered today -Friday, in 13.50 then 13.25. Resistance is 14.10. July support lies at 13.35. July wheat support is 6.75 with resistance 6.90 then 7.25.
Tim Hannagan, PFGBest.com senior grain analyst is a weekly contributor to Agriculture.com.
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