GOOD MORNING,

The board is mixed this morning with wheat leading grains higher and weaker soy values. Heading into this week, all eyes will be the January NOPA crush report, and the USDA’s Outlook Forum numbers on the 20th. Over the weekend China reported 1,886 new cases of coronavirus, with the death toll up by 98. On the trade front, China announced they will grant exemptions on retaliatory duties imposed against 696 US goods, the most substantial tariff relief to be offered so far, as Beijing seeks to fulfill its trade deal commitments.

Wheat futures are firmer on strong EU futures as headlines point to smaller crops. Corn remains a follower of wheat and bean prices. Up to now, China has been purchasing Ukrainian corn, French and Australian wheat, and more Brazilian beans than US. AgResource reported that China purchased 0.5  MMT of corn from Ukraine. With the Coronavirus taking its toll, China will need to replenish their shelves, and traders remain on the look-out for signs of US business. 

WEATHER 

Flooding now going on in Mississippi, with several states along the Missouri River facing elevated flood risk this spring because the soil remains wet and a significant amount of snow is on the ground in the Dakotas, the National Weather Service reported. The forecast heightened concerns for Iowa, Nebraska, Kansas, and Missouri.  

Limited rains in Brazil will help bring harvest to a conclusion, with favorable filling of beans in Argentina. 

REPORTS

USDA Baseline Projections for 2020:

• Corn: 94.5 mln acres, US ending stocks 2,754 mln bu, 178.5 bpa, farm-gate price $3.40
• Soybeans: 84.0 mln acres, US ending stocks 518 mln bu, 50.5 bpa, farm-gate price $8.85
• All wheat: 45.0 mln acres, US ending stocks for 20/21 at 950 mln bu, farm-gate price $4.80.

Commitment-of-trader's report as of Feb 11, disaggregated futures / options combined:

• beans: net short 92,172
• meal:  net short 68,150
• soyoil: net long 52,669
• wheat: net long 45,940
• corn: net short 73,084

The bean and meal position are the most vulnerable to a further upward correction having the largest positions. 

STORIES

Brazilian truck drivers started protesting at the port of Santos, one of Brazil's largest, which will impact the unloading of shipments and arrivals of trucks at the port. Protesters are demanding a reduction of value-added taxes on gasoline and diesel. 

ANNOUNCEMENTS

AgRural reports a record 126.5 MMT of production for beans, as more than a fifth of the planted area is harvested. 

Australia said its 2019/20 wheat harvest was the lowest in 12 years, with ABARES putting it at only 15.2 MMT, the lowest since 2008. In 2008/09, Australia started with a production target of 26 MMT, and only harvested half of that. 

Brazilian analyst Marc Mercosur estimated 2019/20 Brazil soy harvest at 27.4% complete vs. 36.5% this time last year. 

BUSINESS

Egypt tenders for soyoil and sunflower to close on Thursday, Feb. 20th for April 10-30 delivery.

Calls today are as follows:

• beans: 1 lower
• meal:  .30-.40 lower
• soyoil: mixed
• corn: 2 1/2-3 higher
• wheat: 8-10 higher

Outside markets feature weaker crude, trading down to $50.88/barrel, with a stronger US dollar at 99.28. The Dow is off 160 pts.

Tech Talk

March wheat broke to $5.38 where multiple lows were located and did not break down further. The inability of the market to follow-through to the downside resulted in a move back over broken trendline support at $5.51 which take prices back into the previous $5.45-$5.92 trading range, and therefore makes the chart buy-able once again. 

March corn continues its sideways journey from $3.76-$3.86, and this is the only trend. March beans put in an overnight high at $8.98, but if the market cannot trade beyond $9.00 it becomes a third high in a line of resistance that may result in a sell-off once again back towards $8.80. March meal is attempting to stay off ctr lows at $286.40, but we are not that far away from them. If the morning high stands at $292.80, will become a third resistance point against which to sell the market. 

March soyoil is back to its 200-day moving average located at 3045c, which makes it extremely vulnerable to a larger break. Returning to key lows eventually suggests we take them out. and if long would prepare for what could be another larger break down to 30c or 2980c once again. Think we see at the open if key support is going to hold in this market. 

MARCH WHEAT

Trading range is from $5.45-5.92. The price action showed signs of breaking down after testing its first key support at $5.38, where a previous bottom had formed which led to a placement of ctr highs. In terms of behavior, the inability to move to the downside on any type of follow-through was more positive than negative, leading to a rally back into the previous trading range. If short, would have to cover, though suspect this chart will probably move into a $5.45-5.65 temporary sideways trading range. Would now prefer to own a market pullback as prices are moving up and away from support moving averages below. 

 

ON THE CALENDAR

The Export Inspections report is today at 10:00 AM CT and at 11:00 AM  CT is the January NOPA crush report. Advertised estimates are forecast at 173.75 mln bu for Dec. at 174.81 mln bu, and vs. 2019 at 171.63 mln bu. Soyoil stocks are 1.780 bln lbs vs. Dec at 1.757 bln lbs, and vs. last year at 1.549 bln lbs. 

TAGS – Wheat, Feed Grains, Soy & Oilseeds, North America