Morning Comments November 26, 2021


We saw corn and wheat burst higher out of the gate Wednesday before turning lower, with wheat closing over 25 cents off its high. 

Volatile trade action ahead of a holiday can be expected, but this action, in particular, left a lot of folks in the industry scratching their heads as to whether the move was holiday induced, or something worth noting.

December corn had met significant resistance at 5.84 or so since early summer, hitting it, or coming close to touching it no less than 7 times. Many traders were confident a break out above it would take us towards $6.00, possibly pushing to old contract highs beyond that. Wednesday's action took us beyond that ever-important $5.84 number, testing $5.90 before posting a reversal on the charts and closing down slightly.

Confirmation of a lower close today would be a bad technical sign, though reversals haven't meant much to the markets for the last year or so it seems.

While Wednesday's action was concerning from a technical perspective, news surrounding a newly discovered variant of Covid out of South Africa is what is dominating conversations this morning. 

The Nu variant is a mutation experts have been studying since it was first discovered on November 11th, and while limited information is known at this point, there is fear the vaccine will not be able to stop it and that it could be even more dangerous than previous variants. 

Late yesterday we saw travel restrictions start to pop back up with Japan and several European countries stopping travelers from South Africa from entering. 

In addition to news about Nu, the German Health Minister is telling citizens to reduce contact with one another, stating the situation there is "more dire than at any other point in the pandemic so far."

As a result all outside markets seem to be working into risk off mode, with crude off around 5%, its biggest one-day drop so far since July. European milling wheat is also off, while we wait for US grain markets to open at 9:30 eastern.

At the time of this writing, the World Health Organization is planning a meeting this morning to discuss the new variant as well as surges of Covid throughout the world. At this point officials with the group have made it clear they feel travel restrictions are unnecessary, though many will say they've heard that before.

Looking ahead, it's likely all conversations and market moves will be dominated by the ever-changing Covid headlines we will be seeing throughout the day. We will get updated export sales figures this morning, with traders expecting corn, soys and wheat to have decent sales across the board. 

It's also options expiration day for December contracts meaning there could be a significant uptick in additional activity.