GOOD MORNING,

Calls are higher this morning with corn and soyoil posting new contract highs.  Funds continue to buy into what is very light farmer selling, given that much has already been sold.   Corn sees support from Chinese buying and big announcements yesterday which fueled a technical recovery.  Traders are looking for more possible corn and bean announcements today. Soyoil futures trade to new contract highs on fund buying on technical considerations as China's oil stocks continue to fall, and are now down for 15 consecutive weeks.  One firm states that this is the tightest situation in China for soyoil since 2016, despite a high crush rate. 

The big break on the board last week certainly found demand as China stepped in as a large purchaser of US corn this week.  Bullspreads were strong indicating that demand was under the market, and basis is firming.   From there, it was all about technical considerations as gains built during the session.  Last night extended those gains ahead, as we head into the end of the month and begin to start to consider the data in the Feb. WASDE report.  

The short supply and tight carry-out continues to concern the market as the delayed South American crop heads down the road to harvest.  Brazil's AgRural states that rains have also slowed harvest, with only 0.7% of the planted area harvested through Jan 21 finished, just a 0.3% rise from a week ago.  The US may have to step in if South America cannot deliver in a timely manner.   

In political news, truckers strikes in Brazil and Argentina started anew on Monday, and that may turn business back to the US as well.  Roads continue to be blocked disrupting logistics, and should it continue would certainly underpin prices.

The market continues to look for ways to ration supplies in the wake of tight carry-outs, in this regard US crush industry officials announced that they are going to extend their bean forward purchase out 60 days or more vs. the typical 35-45 purchasing cycle.  Crushers continue to vie for beans as export demand remains strong, and limits on supply domestically as well as delayed crops from South America plays into the new timing.

WEATHER

--Heavy rains continue in Brazil slowing harvest and raising concerns about the bean quality.  Argentina's weather is better with scattered periods of rainfall.   Poor weather in Ukraine's Black Sea ports is restricting load operations.  

--In the US, NOAA data shows that La Nina is strengthening, which could portend a warmer and drier than normal growing season for the US.  This week, a snow storm continues through the upper Midwest bringing snow cover from Iowa through Illinois.  

ANNOUNCEMENTS

USDA attache to China shows they kept their 20/21 MY corn import forecast steady at 22.0 mmt, which is 4.5 mmt over the official USDA forecast.  China attributed the higher forecast on a number of factors, including increasing feed consumption, need to restock grain reserves, and higher domestic prices driving import demand.  

Brazil's Deral stated that 82% of the bean crop is in good condition, and harvest has yet to start.  Deral forecast corn planting in Parana at 1% complete vs. 2% year ago.

CALLS

Calls are as follows:

beans:  15-18 higher

meal:  1.80-2.50 higher

soyoil: 130-150 pts higher

corn:  8-10 higher

wheat:  3-5 higher

OUTSIDE MARKETS

A weaker stock market, down over 200 pts, with the US dollar trading up to 90.15 and lower crude at $52.34/barrel.

TECH TALK

In bull markets, pullbacks should be owned, and first support levels are usually attractive places to buy when higher prices are ahead.  Good first technical support levels now move up to $13.70 for March beans, $435.00 for March meal, 4450c for March soyoil, $5.35 for March corn, and $6.60 for March wheat.  Target high extremes includes $5.80-$6.00 corn, $15.00 beans, and $7.00 wheat. 

• March beans continue to enter a wide trading range from $13.00 - $14.00, with upside follow-through taking prices back towards $14.00.  Lower support now moves up to $13.65 given the current strength, and contract highs could certainly be tested.  
• March meal trends towards the middle of the trading range at $445.00 and look to probably go there.  Better support now moves up to $430.00 on any break of size.  
• March soyoil charts remain extremely constructive, with prices clearing 44c to place new contract highs this AM over 45c.  Would look to own pullbacks, as the market continues to follow higher energies and a very strong canola price.  Canola prices into a vertical line higher trade and new contract highs above $700.00 to $706.30.  
• March corn prices exit a two-week period of price consolidation to the uptrend, climbing over trendline resistance which is now $5.20-$5.22.  Look for prices to remain strong should we back and fill from there.  
• March wheat prices continue in a wide range from $6.50-$6.80, having tested $6.30 successfully again.  Would own dips here, and not be an aggressive seller until prices can close under $6.20.

MARCH CORN

The trading range is from $5.00, and the market placed a new ctr high at $5.43 3/4 which now targets $5.50.  A strong ADX at 45 means that buyers should be prepared to own dips.  The market was appearing to form a bull flag, which was distorted to the downside with the low last week at $4.90 1/2.  Nonetheless, the comeback trade over $5.00 and a return to trading range highs, and to the upside of the two- week period of congestion is price positive.  Look for prices to test previous contract highs with stochastics turning higher and support reinforced at the lows.  Good support now moves up to $5.20 given the new highs, and the key target high is $5.50, which appears quite doable now given the strength in the market.  

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