GOOD MORNING,
It'a a long weekend with markets closed for the Martin Luther King Holiday on Monday, January 20. Grains are firmer this morning while the soy complex is mixed. Wheat continues to see support from rising world values, and funds continue buying on a strong technical uptrend. Wheat bulls are sticking around for more, having survived the sell-off elsewhere on the board yesterday. Conversely, oilshare and soyoil prices continue to see downward price action as soyoil bulls exit. Fund selling was noted across the board yesterday due to ideas that a Chinese buying spree could be a second half of the season deal, while new bean supplies for Brazil will be read in a few weeks time. Beans/soyoil start lower.
WEATHER
Generally favorable weather continues for developing beans in the major growing areas of Brazil. Hot and dry weather impacts beans in northeast Brazil with crop losses expected. Generally favorable weather continues for beans in central Argentina with mostly adequate moisture and no heat stress. SA weather remains a neutral to bearish feature.
ANNOUNCEMENTS
China will impose more curbs on agriculture and widen restrictions on industrial development in the next five years in a bid to protect scarce, already contaminated water supplies from further pollution.
China has opened its market to Russian beef supplies and has certified two Russian beef producers for such deliveries, as reported by Russia's agriculture safety watchdog.
China's 2019 pork output was at a 16 year-low, producing 42.55 mmt of meat last year, down 21.3% from 2018.
CALLS
Calls today are as follows:
beans: 1-2 lower
meal: .10-.30 higher
soyoil: 15-20 lower
corn: 2 -2 1/2 higher
wheat: 1 higher
OUTSIDE MARKETS
Outside markets are firmer with crude trading up to $58.94/barrel, and the US dollar trading up to 97.51. Equities continue to rise to record highs, up 70 pts.
TECH TALK
- March wheat still sits close to the recent high trade at $5.78, and walking back to recent market lows the are holding firm.
- March corn is sideways within its $3.71-$3.91 trading range, with the trend continuing weak. Rallies towards $3.85 probably finds selling interest, and would expect the recent price action to begin a pivot phase around $3.80.
- March meal prices remain in a congestive phase around the $300.00-$302.00 level of trade, which is also becoming a point of value and equilibrium. With a weak trend at hand, expect that breaks will come back to this point, and that failed rallies will as well. Could continue to straddle/strangle March meal from $295.00-$308.00.
- March soyoil continues to drop lower, having now presented a market top with a new low for the move below 33c this morning and not much support until the market reaches 3250c. Expect on a weaker tone that we could go there.
- March beans trade down to its pivot point of $9.22, a level reached before we hit $9.61. The 200-day moving average also crosses here, and the market so far is finding some chart stability. However, starting on key moving averages is also a sign of weakness, and increases the chance that we violate them. Violation of the 200-day moving average at $9.21 1/2 suggests that we trade to $9.16, which has been the bottom of a $9.16-$9.60 trading range.
MARCH CORN
Overall trading range continues to be from $3.71-$3.91 and the major trend remains sideways. The collapse of the market from $3.85 down to $3.75 1/4 is bearish, and implies that the market could trade towards $3.71 again at some point. For the day, trendline support surfaces just below yesterday's low at $3.74 1/2, and the market is probably going to continue its recent trading range with a pivot point of $3.80 going into the growing season. Would look for corn to outperform beans for the moment, which may suggest that beans could continue to slip while corn remains sideways. If short, would probably cover at the lower end of this trading range on a break towards $3.72/$3.73.
TAGS – Feed Grains, Soy & Oilseeds, Wheat, North America