GOOD MORNING
The markets are called steady but could remain well bid with a macro-risk on day on the outside that could spill-over into grains and soy. President Trump tweeted that the Phase One deal would be signed at the White House on Jan. 15. The Dow was higher overnight as other world markets continue to perform better off the hopes for continued trade talks between the US/China. Most are calling the markets steady, but think that soyoil will open higher following a correction on Tuesday, and a sharply higher palm oil market this morning. That price action should bring a bid to beans, which closed on a strong note last session. Wheat could generate a bid from a constructive chart as well, and a decent close.
In other morning stories, China has eased custom regulations on imports of beans through some northern border checkpoints, (Heilongjiang, Inner Mongolia, and Xinjiang), which could actually allow for easier access of grain from Russia, Kazakhstan, and Ukraine.
The January WASDE will be released on January 10. For today, we get the monthly USDA grain and oilseed crush data, with advertised estimates expecting to show 5.28 mmt of beans processed, and oil stockpiles at 1.840 bln lbs vs. 1.821 bln lbs mo ago. The report will be released at 2:00 PM today.
WEATHER
Scattered rainfall fell over Brazil while Argentina turned mainly dry. Low water levels in certain areas of Argentina's Parana River has caused logistic challenges to bulk carriers in Argentina's Rosario region, according to Agricensus. Mostly favorable weather is expected to continue for Brazil, although recent hot and dry weather has depleted soil moisture in Brazil's Rio Grande do Sul. Weather for now is still neutral to bearish.
ANNOUNCEMENTS
Bird flu was detected in eastern Poland and up to 40,000 birds may have to be culled to prevent the spread.
EIA data on Tues. forecasted Oct. 2019 US production of biodiesel at 144 mln glns, up 2.0 mln glns from the prior month. The report also showed 558 mln lbs of soyoil was used as feedstocks, which was 51% of all feedstocks used.
DELIVERIES
beans: 597
soyoil: 605
meal: 1485
CALLS
Calls are as follows:
beans: 1/2-1 higher
meal: steady
soyoil: 10-15 higher
corn: steady
wheat: 1 1/2-2 higher
OUTSIDE MARKETS
Outside markets are trading higher with crude at $61.60/barrel and the US dollar trading to 96.73. The Dow is up 170 pts. Look for firmer commodities to lend a hand to grain opening values this morning.
TECH TALK
- March beans ended on a positive note after pulling back and testing the lower $9.40's.
- If soyoil recovers, would look for beans to move into a test of the lower $9.60 level of trade. Good support moves up to $9.45, increasing the chance for a test of $9.65/$9.70.
- March soyoil corrects back to test key support at 3438c, which was the previous contract high before the new one at 3552. Good bull markets will usually test prev. contract high levels to see if they can hold. Would look for the chance that we see another test of contract highs again, as the gap still remains open to 3429c.
- March wheat is also establishing $5.50 as a new support zone in a market that could test recent highs at $5.65 1/2, enroute to testing $5.75 or higher.
- March corn charts turn sideways, but if it can hold at $3.85 could base off there to higher levels if the other markets work upward.
MARCH BEANS
The major direction is steady to higher, working in an upward uptrend channel. Breaks towards the lowest end of the channel have held, fortifying support at $9.35-$9.38. The price pattern has been for shallow pullbacks to hold, with the uptrend beginning to strengthen. Critical resistance is at $9.56/$9.58, right where the market closed. But closing into resistance often implies that the next direction will be higher. Overall trading range possibilities for now include $9.20 lows to $9.70 trading range highs. Prices may open steady, and major support moves up to $9.40 with the recent price action. If long, may want to sell some at the open, but keep the rest until the market can turn and close under $9.35.
TAGS – Feed Grains, Soy & Oilseeds, Wheat, North America
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