GOOD MORNING,

Prices are mixed, higher wheat and soyoil, in what appears to be trading ranges from the top.  The higher equities market seemed to be the focus of the day yesterday, robbing the ag markets of their upside trends.   Wheat futures were lower on the higher US dollar and rising freight costs, which makes US wheat uncompetitive and in need of searching for that level that sparks demand.  Today, short-covering lifts wheat from its lows as major support is tested.  Wheat is also following the Matif wheat market, which placed eight-year highs.   Wheat also finds support from lower ratings in Kansas, Oklahoma, and Texas wheat after the extreme cold weather last week.  

Of note is that Russia doubled its export tax to 50 euros, ($60) /ton on Monday in an attempt to curb food inflation. The tax was 25 euro/ton Feb 15-28.   Corn prices are lower but also find stability at key trendline support points.  Weighing on corn are weaker Chinese futures, on ideas that farmers will plant more corn than beans given margins.  Increased exports from South America also weigh on corn.  So far, it has been quiet over the last several weeks with no 8 AM business announcements for either corn or wheat.

Beans drift lower on the back of rising production estimates from Brazil, though dryness in Argentina will put a floor under breaks of size.  Brazil's AgRural forecast 20/21 bean production at 133.0 mmt vs. their prev. 131.7 mmt.  They estimate that 25% of the crop is now harvested vs. 15% prev. week but lagging the 40% average.  SA is offering beans and meal for export, which is bearish for CBOT.  The fan-favorite trade of the day returns to buy soyoil/sell meal trade.  Meal finds weakness from further reports of the return of African Swine Fever in certain regions, while oil benefits from good demand.  Egypt tendered for 30,000 mt of soyoil for first half May delivery.  

WEATHER

--South American weather is a mixed bag, with some pop up rains in Argentina but not enough to slay the bull.  Next week will be another warm and dry one in Argentina.  The GFS model was slightly wetter in Argentina for the second week of the month.  More rains were noted in southern Brazil this morning, which will last through next week and be beneficial, but once again causes field delays.  

--US weather trends are warmer and wetter, helping soil conditions to warm for planting. 

REPORTS

USDA Grain and Oilseed Crushing: 

Jan crush:  196.5 mln bu, up 4% from year ago, vs. advertised trade estimates of 193.7 mln bu, and vs. 193.7 mln bu in Dec.  That comes in slightly below the record all-time monthly crush of 196.6 mln bu from October 2020.  

Soyoil ending stocks at 2.305 bln lbs vs. an expected 2.32 bln lbs, which is just shy of the average trade guess of 2.315 bln lbs, and an increase from 2.219 bln lbs in Dec. 

Meal:  512,393 short tons from 358,134 in Dec.  

Gist of the report was bullish for the soy complex.

ANNOUNCEMENTS

Brazil's AgRural forecast Brazil Safrinha crop at 39% planted vs. 24% week ago, and behind 67% year ago.  

Russia's SovEcon raised its forecast for 20/21 wheat exports by 1.2 mmt to 39.1 mmt due the fast pace of shipments in recent months.

China' ministry announced they would crack down on the production and sale of counterfeit low quality seeds, calling for a nationwide inspection.

Ukraine's Economics Ministry reported that the country's wheat export quota has used 78% of the 17.5 mmt allowed for 20/21.

CALLS

Calls are as follows:

beans:  3-5 lower

meal:  2.20-2.50 lower

soyoil:  3-5 higher

corn:  2 1/2-3 lower

wheat:  4-6 higher

OUTSIDE MARKETS

The stock market down 35 pts with the US dollar trading higher to 91.39, and crude trading up to $61.02/barrel.  

TECH TALK

• May corn prices break key support at $5.38 which was trendline yesterday which takes prices towards the lowest end of the range at $5.25.  Prices appeared heavy at the start of trade yesterday, selling off into the close, and leaking lower throughout Monday's trade. An outside day with a lower close finds prices now moving to key support at $5.30/$5.32.  Target lows are $5.25, so would look to probably go there, but think we stabilize if that occurs.  Dec. corn tests the prev. upside break-out level of $4.65, which should also offer up support to a defensive market.    
• May wheat breaks key support at $6.50 which takes prices to target $6.45, clearly important support that held for a bounce-back.  Major support is $6.35, and would cover a partial short, price, or try the long side of the market which has an extremely weak ADX reading of 12.  For the day, it appears that $6.45 could hold for upside retracements.  
• The May bean chart appears to be setting a trading range in motion which includes $13.75/$13.80 on the downside, with strong trendline support still holding at $13.80.  Prices appear ready to head into a tight congestion phase from $13.80-$14.20, and still prefer to be a buyer in this market until prices break support at $13.70.     
• May meal prices test recent lows at 415.00, but better support levels are located at $413.00.  The market is bouncing off the overall low of $414.10 which is trendline support.  A descending triangle is forming, however, which could result in failed rallies and into new lows targeting $405.00 to $410.00.  
• May soyoil retreats to major support at 4850c which is a double low in a 4850c-5095c trading range.  Given the strength of this market, could own the market against 4850c with a tight sell-stop, as the pullback is fairly shallow and prices this AM are already back over 49c, indicative of market strength.  

MAY CORN

The major direction has been higher, but the price action was heavy yesterday as small rallies were noted as selling opportunities.  Look for trading ranges to now take place, though the market has not yet entered bear market territory.  From the low trade of $4.25 to ctr highs of $5.72 come the following Fib. retracements: 

38% - $5.12

50% - $4.95

62% - 4.76

Prices would have to break $ 5.25 to achieve a 38% retracement of $5.12, but if we get there would be covering a partial short, pricing, or looking to go long as prices seem to be entering trading range territory while not morphing into a lower trend.  

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