GOOD MORNING,
The markets are firmer this morning as funds remain long and some of the proper corrections have been made. Global grain markets are higher, with EU corn and wheat higher. Chinese markets are higher as well, and now US commodities follow in line. Corn started the PM session higher followed by beans. Products are lagging the pace. Beans are higher on rumors that China is asking for offers for US beans for the July/August time period. US beans are still cheaper than Brazil and Argentina at this point.
This morning's news is that Argentina' government met with farmers and said it would review the decision to temporarily suspend corn exports. Corn is higher as it heads towards the $5.00 benchmark once again. Wheat is attempting to follow the other markets upward, but traders seem to be using it as the sell leg once again for corn and bean spreads. However, Russian export offers have dried up, which could make the US more attractive, and wheat sales are running 10% higher than year ago. The US Plains outlook continues to look too dry.
WEATHER
There is a continuing chance for better rainfall for Argentina over the weekend, while conditions in Brazil will be favorable as well. There are still dry pockets from Rio Grande do Sul into Paraná, however, and more rainfall will be needed to help these regions. The rain event in Argentina is expected to be a good one, so anything other than that could provide the market with another leg higher Sunday night. The system should cover west-central Argentina and northern areas.
ANNOUNCEMENTS
World food prices rose for the seventh consecutive month in December led by dairy and veg oils, as reported by the Food and Agriculture Organization, of the United Nations. Dairy prices have climbed due to a stronger global import demand amid concerns of drier, warmer conditions in Oceania.
Argentina rated their bean crop 27% good/excellent vs. 42% last week and vs. 52% last year.
French soft wheat shipments outside the EU in Dec. fell from a season's high the prev. month as exports to China eased. Soft wheat exports to destinations outside the EU totaled 797,000 tons in Dec. vs. a record 877,000 in Nov.
Argentina's BA Exchange reported wheat crop conditions for 20/21 at 34% good/excellent.
DELIVERIES
Jan beans: 80 CHS puts out 55, Stonex puts out 25, Bunge stops 36
CALLS
Calls are as follows:
beans: 12-14 higher
meal: 2.50-3.00 higher
soyoil: 20-25 higher
corn: 2 -2 1/2 higher
wheat: 1 1/2-2 higher
canola: 3.80-4.00 higher
OUTSIDE MARKETS
Higher crude oil values up to $51.83/barrel, with the US dollar trading up to 90.13. Equity markets around the world are strong, with the US making new all-time highs.
TECH TALK
- March beans bounce again from $13.45, confirming it is a trading range bottom. The ability to move up and retest previous contract highs is constructive, and improves the chance of seeing higher values and new contract highs again. Target is $13.83 to $13.85 for March beans on a continued upward trade for today.
- March meal remains in congestion phase from $430.00-$440.00 but is also able to probably reach new ctr highs if beans head upward. There is not a confirmed top, but a better supported $420.00 price level. Look for strength to continue with a $450.00 target.
- March soyoil futures rebounds back from a test close to 43c with trade back over 44c. Prices are now caught between recent lows of 43c to the contract high at 4469c, with any trade over 4420c clearing the way for a test of ctr highs. Would still prefer to own breaks for the possibility of targeting 45c.
- March corn retained a bid yesterday and is on the doorstep of trading back over $5.00 once again. The market pulled back to test $4.87-$4.90, which may continue to hold for an eventual trade again over $5.00.
- March wheat continues to trade both sides of even and continues to be a follower of prices elsewhere on the board. However, the sideways trade is noted with support levels of $6.34-$6.38 holding this week. Wheat bears need the market to break key support at $6.30, but until then would prefer to own this market for a possible test again of recent ctr highs of $6.64 1/2.
MARCH CORN
Prices trade from $4.80 to recent highs of $5.02 3/4. It was noted on weakness elsewhere on the board yesterday that corn prices remained well bid, and now buyers will have to chase prices once more. The ability to only trade down to $4.90 on board strength elsewhere now identifies this level as one of renewed building support, with the possibility of trending back over $5.00 to test recent ctr highs again. The ADX is strong at 46, while extreme overbought conditions are in play as well. Look for an eventual $4.80-$5.15/$5.20 trading range, taking a cue from strong bean trade.
TAGS – Feed Grains, Soy & Oilseeds, Wheat, North America
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