GOOD MORNING,
The fight for acreage is heating up between corn and beans. Corn is first up for planting, and sticking to its guns by holding in firm. Resistance for beans is still in play with a carry-out that is not snug, and more supply on the way. China may purchase beans, but the unknown post trade agreement signing continues to keep beans in a tight range. Additionally, the weaker Brazilian Real, which fell to a new low yesterday, provides the conditions for Brazilian farmer selling activity. Nonetheless, beans are up in front of the signing date tomorrow, retaining its $9.35-$9.55 comfort range. Profit-taking in oilshare continues, with meal higher against new soyoil chart lows. March wheat hits new trading range highs, with a continuing technically sound performance.
WEATHER
Beneficial rains fell over the dry parts of Brazil's Rio Grande do Sul late last week, with more expected midweek. Dry weather returns to northeast Brazil increasing stress on beans with crop losses in this region. Favorable weather continues across bean and corn crops in Argentina. In the US, mostly dry weather will continue across the Eastern Cornbelt, with light temperatures near to above normal. Weather for now is slightly friendly with some continuing dry spots in Brazil creating losses.
ANNOUNCEMENTS
Russian grain industry sources, according to media reports, say the Russian Ag Ministry is planning first half 2020 grain export quotas.
Chinese bean imports in Dec. surged 67% from a year ago to a 19-month high as US /Brazilian cargoes booked earlier cleared customs. Customs reported 9.54 mmt of beans imported in Dec., 15% over the Nov pace of 8.28 mmt. Total 2019 bean imports were 88.51 mmt vs. 88.02 in 2018.
China's pork imports for Dec. were nearly four times vs. a year earlier to 375,000 mt.
DELIVERIES
Beans: 18
Soyoil: 281
Meal: 235
BUSINESS
Egypt tendered for 55,000 mt of wheat and 3,000 mt of soyoil. Jordan tendered for 120,000 mt of wheat, with five firms offering.
CALLS
Calls are as follows:
beans: 1 1/2-2 higher
meal: 2.00-2.20 higher
soyoil: 30-35 lower
corn: 1/2 higher
wheat: 4-6 higher
OUTSIDE MARKETS
Outside markets are firmer for energies, though crude hit a low of $57.72/barrel, and a firmer US dollar trading up to 97.50. The Dow is up 12 pts.
TECH TALK
- March wheat up-trend still remains intact, with new highs but up against major resistance at $5.70. Funds are long, and pullbacks should be purchased. Good support moves up to $5.50 in March wheat from $5.45, as the chart moves systematically higher.
- March corn played its hand on report day with new lows but no follow-through to the downside and a good close. Look for shorts to continue to attempt to find places to opt out, and the market is back to its previous high of $3.92.
- March beans bend but don't break, putting in still congestive trade from $9.35-$9.55. The longer the chart stays above $9.35 successfully, the better the chance of heading back towards $9.55 to $9.60.
- March meal trades sideways and traders continue to buy meal / sell soyoil. Could continue to straddle/strangle March meal from $297.00-$310.00, with a break-out considered to be any trade over this range.
- March soyoil retreats from its ctr highs of 3567c, breaking below 34c to new lows this AM at 3351c. Would note that a Fib retracement from ctr lows to ctr highs finds a 38% retracement level at 3250c, so if short could aim for this, but think that we have also arrived at a level at 3350c that could find support. If short, would be covering something in given the strength of this market, though the chart certainly suggests that a top is in place at this time.
MARCH SOYOIL
The market appears to have set a top for its move to contract high of 3567c, but would not be confirmed until it traded underneath its 38% Fib level, which is at 3250c. The break over the last two days is more severe in nature than any time when the move started, meaning prices could continue to trend lower. Fib. pts are:
38% - 3250c
50% - 3140c
62% - 303c
Stronger markets will not even trade back to 38%, and the uptrend is still strong with an ADX reading of 35. Therefore, if short would be systematically covering at these levels on the way down. For starters, we will see if 3350c will hold for a congestive phase from 3350c-3550c. The pattern has been to drop 200 pts at times for corrective phases, so any settlement under 3350c paves the way for a larger market correction.
TAGS – Feed Grains, Soy & Oilseeds, Wheat, North America
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