GOOD MORNING,
Prices continue to identify trading ranges that make sense heading into the March 9 WASDE. For the day, most of the markets are lower with the exception of firmer oilshare. Traders continue to buy soyoil on tight supply and sell meal on more emerging African Swine Fever cases. An outbreak of African Swine Fever has been confirmed in piglets which were illegally transported from Funing county in China's southwestern province of Yunnan, as announced by the farm ministry. Argentina's soyoil prices are higher on Chinese, India, and Iran interest.
Dry conditions in Argentina continue to support values, with yesterday's rally in beans said to be partly attributed to potential pricing by China of open and unshipped sales. The tighter bean carry-out situation may come to the fore next week as we approach the report. Conversely, Informa estimated Brazil’s production near 136 mmt, which is one of the highest estimates shown.
Grains started the night on the defensive led by corn. Argentina's corn offers have been trending lower in order to compete with the US. Some SA corn biz has been done now vs. US. Corn inverses continue to trade lower for the deferred, though the nearby remains in congestive mode. For the day traders will be looking at the ethanol numbers which are released this morning.
Wheat prices were higher yesterday with perhaps some business being transacted on this week's Monday sell-off. Seasonally this is the time of the year when wheat business is done. Lower wheat ratings on Monday and the possibility of business stabilized wheat at the bottom, but can it hold on a return trip. The positives for wheat include talk of lower EU and Black Sea wheat exports, which resulted in steep inverses for Matif wheat. US wheat continues to try that place that sparks demand.
WEATHER
Net drying will continue in Argentina in most of the regions through March 10. The GFS model run removed rain again into March 15. This is a situation that bears monitoring as 25% of areas in Argentina are too dry. It also continues to rain in Brazil as they harvest beans, with the southern regions notably wet through this weekend, which will lead to harvest delays. Next week's forecast for Brazil offers up a drier outlook which will be beneficial for central and southern regions.
ANNOUNCEMENTS
Brazil's Deral estimated Parana's 20/21 bean conditions at 81% good/excellent vs. 80% week ago. They estimated harvest at 23% complete vs. 6% week ago.
USDA attache to Argentina projected 20/21 bean production at 47.5 mmt, below the USDA forecast at 48.0 mmt.
The Argentina peso has strengthened on the back of high global grain prices, reducing the risk devaluation, and helping the gov. to slow economic reforms.
DELIVERIES
Meal: 1
CALLS
Calls are as follows:
beans: 8-11 lower
meal: 3.30-3.60 lower
soyoil: 10-14 lower
corn: 6-8 lower
wheat: 6-9 lower
OUTSIDE MARKETS
Stocks up 120 pts. with crude congesting around the $60/barrel level, and the US dollar trading up to 91.05.
TECH TALK
- Back and forth price action continues to show that the markets are now working into trading ranges, though major trends are still higher. May soyoil held that key low at 4850c, which completed a down cycle, to test 50c again. The ability to bounce back from this level suggests that prices can continue to make new highs. The chart is constructive and would expect a pullback to 49c to be a buying opportunity.
- May meal by contrast continue to work lower with rallies failing to find follow-through. However, prices have seen little follow-through to the downside of $420.00, and trendline support for the day should we go there is $414.00. Would expect May meal to remain a $413.00-$420.00 market or higher.
- May bean prices move sideways but always recover from sharp market losses, more indicative of a higher trending market than not. It appears once again that the market is establishing a line of tops from $14.14-$14.17 which is serving as resistance for a push down to trendline at $13.80. Look for more bean bulls to become disenchanted as prices wander 15-20c either side of $14.00.
- May corn rallies continue to fizzle out, though we remain stuck from $5.25-$5.60. The chart is now building some new resistance with the failure to maintain rally strength, which implies that we could see further liquidation and another push down to $5.30 once again.
- Like the corn chart, May wheat is building new resistance as well with failed rallies into $6.60 to $6.65. Trendline support on a follow-through break of size after the open is located at $6.42 up to $6.50. Think we see $5.30 May corn and $6.50 May wheat traded today on sideways patterns and follow-through selling after the open.
DECEMBER CORN
Major direction is sideways/higher, with a break-out over $4.65 directing traffic towards the new contract high at $4.79. The ADX trend is strengthening a bit at 28, meaning pullbacks are going to still be places for ownership. The trading range is from $4.65 to $4.80, and until prices can close to the downside of $4.65 would expect a strong trade. On a weaker start prices may trend lower towards $4.60 but would cover a partial short unless prices can close under this visual support level, which would be under the current trading range as well. Trade to the upside of $4.77 suggests we see new contract highs.
TAGS – Feed Grains, Soy & Oilseeds, Wheat, North America