GOOD MORNING,
The December WASDE report has come and gone and traders are left watching weather and trade negotiations. Funds maintain a net short position in corn and beans, but right now the major direction is sideways to higher. Grains sit close to the bottom of trading ranges, beans near the highs. This morning, prices are cautious and leaning lower, but beans still remain relatively firm in the big picture.
The gist of the report was neutral for corn and beans, but moving forward seasonals are more bullish for both of these markets. The wheat report was split down the middle with record world stockpiles, but lower US ending stocks that are at five-year lows. On another bullish front, Australia's ABARE lowered their wheat inspections by 1.65 mmt to 9.22 mmt as drought continues to plague the country. There are still no Chicago wheat deliveries.
In the world of politics, the US, Canada, and Mexico signed an amended USMCA trade agreement Tuesday.
WEATHER
Favorable moisture conditions continue for Brazil although there are now reported cases of Asian Rust issues. The problem spot is Argentina, where dry, hot weather continues over the next week, depleting soil moisture and increasing stress on developing corn and beans that may also slow planting. South American weather for now is neutral to bullish for the market due to Argentine dryness.
Drier weather in the Midwest this week should have allowed for more harvesting to occur.
REPORTS
USDA slightly raised estimates for US prevented planting and failed acres:
prevent corn plant at 11.432 mln acres vs. 11.430 prev., bean prevent plant at 4.461 mln acres vs. 4.459 mln acres prev. and wheat prevent plant at 2.220 mln acres vs. 2.217 mln acres prev.
2019 failed corn acres as of Dec 1 at 457,576 vs. 456,950 prev., failed bean acres at 67,084 vs. 66,722 prev, and failed wheat at 378,733 vs. 377,407.
ANNOUNCEMENTS
China's Ag Minister announced new ASF cases in 3 dead wild boars.
DELIVERIES
Corn: 79
Soyoil: 295
Meal: 506
CALLS
Calls today are as follows:
beans: 1/2-1 lower
meal: 80-1.50 lower
soyoil: 5- 10 lower
corn: 1/2 lower
wheat: 1 1/2-2 lower
OUTSIDE MARKETS
Outside markets include weaker crude at $58.81/barrel, and a firmer US dollar which trades to 97.59.
TECH TALK
- March bean direction is higher, and the up-move is not complete. The 100- and 200-day moving average is likely to halt a further advance, however, and slides across at $9.19-$9.22. If short, want to see the three recent highs from $9.15-$9.17 3/4 hold.
- Products still appear more vulnerable to downside price action, with Jan soyoil rallying yesterday right to key trendline resistance at 3180c before failing.
- Look for retracement back towards 31c to now offer support, but resistance is building on the chart.
- Jan meal takes out key support at $298.00, leaving it open to drop back to possibly test contract lows once more at $292.60.
- March corn is sideways, but the pattern here also shows vulnerability, as this market has tendend to move sideways for a time only to break lower.
- March wheat breaks back towards the lows yesterday of $5.19 1/4. Returning to previous lows is never a sign of strength. If long, may want to consider getting out as the path of least resistance could pave the way for trade down towards $5.05-$5.11 eventually.
Key support levels which if broken will lead to lower trade:
March beans: $9.08
March wheat: $5.18
March corn: $3.74
Grains sit close to these lows, and appears as though they will be put to the test today.
MARCH WHEAT
Overall trading range is from $5.05 - $5.45, and the market has been pivoting around the mid-point at $5.22. The market remains well balanced at 50% relative strength index, and the trend is still weak with an ADX reading at 18. Price action suggests that the chart could pullback further, with the rally post USDA report not getting very far. Would look for a test of key support from $5.15-$5.18, and eventually perhaps down to $5.11 which should provide an adequate ledge of support. If March wheat breaks $5.19, yesterday's lows, could weigh on corn as well.
TAGS – Feed Grains, Soy & Oilseeds, Wheat, North America
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