GOOD MORNING,

The market remains focused this week on South American weather, harvest pressure, and signs of any Chinese purchases.   Last week the corn market reversed course, breaking to new lows on Thursday only to take back those losses on Friday, in effect showing us its trading range in a two-day period.  Part of the rally was attributed to potential corn business, as traders noticed signs of export trade off the PNW, (thought to be possible Chinese business), which drove shorts out since it was a three-day weekend.  

Passage of the USMCA trade deal was an important stabilizing feature.  Technicals featured a strong trade in wheat with an outside up week closing higher.  Strong demand, lower production from Australia, a transport strike in France, and rising world values in the Black Sea continues to support wheat.  

There were also rumors last week that beans were traded off the PNW, but totals were small.  PNW beans are competitive up front with Brazilian new crop on a landed basis in China, but only without a tariff.  The start of Brazil's bean harvest in Feb. will weigh on beans until Chinese business is confirmed.  

Today, wheat will open higher against all else, with corn and beans back inside previous trading ranges.  Soyoil values are trying to find support on a further correction from its contract high.

WEATHER

South American weather remains benign, though some net drying activity has now occurred.  Follow-up rains will be important in the month of Feb.  Argentina corn planting is about 90% complete, while some of Brazil's Safrinha growing regions are gearing up for very early corn planting, which may be 1% complete.

REPORTS

Commitment-of-trader's report as of Jan. 14 disaggregated futures / options combined: 

Beans:  net long 6,290

Meal:  net short 31,720

Soyoil: net long 112,911

Corn:  net short 78,442

Wheat:  net long 29,787

The surprise in the report is the still short corn position, though index funds ended the re-balancing period from Jan 8-13 by buying 22K corn contracts.  

ANNOUNCEMENTS

The Ag Ministry in China announced the issuance of biosafety certificates for domestic GM corn and bean traits, the last step needed before they can be sold to farmers for commercial planting.  

China's Ag ministry announced H5N6 avian flu found in a fourth flock of swans in Xinjiang region.  

Brazil's AgRural says only 1.8% of the bean crop has been harvested so far, reducing the ideal window for planting the Safrinha corn crop, which is sown after beans are harvested.  Last year, Brazil was 6% done by this point.  

Russian wheat export prices reached their highest level a week ago since the season started last July due to demand from Egypt and the recent announcement that Russia may cut exports out of the country.   

Argentine wheat to China is expected to increase over the next two months due to lower Australian and Black Sea lower production.

CALLS

Calls today are as follows:

beans: 6-8 lower

meal:  .10-.20 lower

soyoil:  45-55 lower

corn:  3 lower

wheat:  1 1/2-2 higher

OUTSIDE MARKETS

Outside markets are leaning weaker with crude oil down to $57.73/barrel, and the US dollar at 97.45.  Equities are off 55 pts as impeachment proceedings get underway this week.  

TECH TALK

• Wheat is well bid and prices continue to edge upward, building support on setbacks while posting an outside week and closing higher last Friday.  
• March wheat continues to trade close to its recent high, so we could certainly post another.  
• March corn backs away from $3.90 again but is still proving that $3.75/$3.80 is a value level.  
• March beans trade back to test previous resistance at $9.33, but open on a weaker note, which increases the chance that we may trade below $9.20 for still lower price targets located closer to $9.15.  
• Buy wheat/sell bean trade was a previous trend and for the day seems to be at work again.  
• March meal forms a small pennant flag at the bottom of its $297.00-$308.00 trading range, and would continue to straddle/strangle this level, particularly as trades continue to unwind prev. buy soyoil/sell meal trade.  
• March soyoil is back below 33c in extremely weak trade, suggesting the downward correction could continue.  Lower targets are 3250c, a level that may show some stable price action, should we go there.  

MARCH WHEAT

Recent trading range is from $5.50 - $5.78 3/4 (new high), but that high could be challenged as the technicals remain strong.  The market breaks but holds lower levels of support to trend higher.  The market remains in an uptrend channel, and top of channel today crosses at $5.80 should we go there, and continues up towards $5.90 over the next few weeks.  The ADX (trend indicator) is a very strong 39, meaning traders will continue to look for places to buy in.  If wanting to be short, would have to look for a good reversal signal such as a bear flag, island top, or outside day closing lower, none of which are present right now.  Major support now moves up to $5.57, which is the bottom of the uptrend channel.  Since stronger markets do not trade down towards support, would not look to go there today.  For now, a top has not been made, and higher targets are located at $5.90/$6.00.  Key resistance today is from $5.75/$5.78 and we are testing it.

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