GOOD MORNING,
Futures are lower this morning led by soyoil, followed by wheat. Soyoil is lower following a sharp break in palm, as traders are concerned that the virus may lead to lower demand from China and India. Chicago corn and bean prices piggy-back off weaker Chinese and corn futures, also lower on the virus impact.
After re-entering its previous trading range yesterday, wheat futures rallied sharply without much to stop it, which provided spillover support for corn. Beans could not manage to get above even, a foreshadowing of further weakness to come as a large SA harvest and a continuing weak Brazilian Real currency, (which stimulates farmer selling), weighs on price. March soyoil finally traded beneath its 200-day moving average which sent prices back to 30c this morning.
Traders are still searching for signs that China will step in and start to buy Ags. The headlines yesterday saying that China was planning to grant tariff exemptions on US farm products, the first step in making purchases, was met without enthusiasm from the bean market, though ideas are that beans and meat would be at the top of any shopping list.
Throwing in a few more concerns is the gasoline strike down in Brazil. The last time this occurred, Brazil's port of Santos was cut off in such a big way that a state of emergency was practically declared. It bears watching whether the situation grows worse.
WEATHER
Central Brazil continues to see periods of rainfall slowing harvest while southern areas remain dry and hot. Argentina's weather is neutral to positive, with timely rains good for pod-filling.
In the US, conditions are dry with temperatures running below normal in the west, with dry weather in the east.
REPORTS
The weekly Texas state crop report noted corn silage producers in the Cross Timbers region (southeastern Kansas across Central Oklahoma to Central Texas) experienced cold and wet conditions that has delayed plantings for a week or two. Winter wheat in Texas was 7% headed vs. 5% week ago, and 1% year ago. Conditions are rated 35% good/excellent.
ANNOUNCEMENTS
In order to cope with a shortage of poultry, China's Ag Ministry said they will roll out special loans and lower interest rates for key poultry suppliers. They hope to strengthen cooperation with farmers, slaughter houses, and retail supply chain.
Russia's Ag Minister forecasts the 2020 wheat crop up 3--5% from year ago.
Ukraine's 2020 grain harvest is forecast to fall 3.2% to 72.7 mmt from a record 75.1 in 2019 due to a smaller winter wheat sowing area and poor weather.
ProAgro forecasts Ukraine corn production for 2020 at 35.849 mmt, on par with a year ago.
Cordinnier raised his forecast for Brazil's bean production to 125.0 mmt, up 1 mmt, with a neutral bias moving forward. He put Brazil's corn production at 100.0 mmt, unchanged. Argentina's bean production was raised 1 mmt to 54 mmt, and corn up 1.5 mmt to 49.0 mmt.
Prices have been weakening steadily into the close:
Beans: 5-7 lower
Meal; .40-.80 lower
Soyoil: 50-60 lower
Corn: 1 lower
wheat: 5-7 lower
OUTSIDE MARKETS
Outside markets feature firmer crude, trading up to $52.93/barrel, and a higher US dollar at 99.58. Stocks are up 80 pts.
TECH TALK
- May wheat turns higher from lower after prices based from $5.40 to $5.50. The chart had turned toppy, but prices never had downside follow-through, suggesting a return to the previous trading range from $5.40 up to $5.90. Prices are back in congestive mode for the moment but would expect the 50-day moving average of $5.53 May wheat to now serve as a buy-able level of support.
- May beans are a sideways trade, turning lower now from higher, with a trading range from $8.83 up to triple highs of $9.08. Expect that the market may find its way down towards $8.80 at some point given that there are now triple tops at $9.08, and the market refused to rally yesterday.
- March soyoil breaks 3040c, which triggers sell-stops a move back below 30c. Charts are bearish soyoil, funds are long, and it appears as though the 2980c level will be tested once more to see if prices can hold there, with light trendline support at 2950c should we go there.
- March meal remains a sideways $286.40 to $295.00 trade, with an ADX reading of 16 suggesting that prices likely remain trapped within these levels. Could straddle/strangle the market here with upside break-out.
- May corn is a sideways trade from $3.80 up to $3.87, and still coiled under 3 moving averages that are in place from $3.88 to $3.93. Would prefer to own or price on good breaks, particularly if prices can trade down to $3.75, the lows placed last December.
MAY BEANS
Trading range is from current lows of $8.83 up to $9.10. The market refused to rally yesterday even as prices were strong elsewhere yesterday, which made it sell-able against triple highs of $9.08. Look for a test of minor trendline support at $8.93/$8.93, with a break below that suggesting the chart could work its way to trading range lows of $8.83. Funds are short and will defend.
TAGS – Feed Grains, Livestock, Wheat, North America