GOOD MORNING,

Prices continue to trend sideways to lower with the short-covering rally ending in beans as bears take control and try to push values back under the $9.00 benchmark in March.  Despite confirmed business to China, the market pulled a buy the rumor and sell the fact bean trade, looking to now see where trading range lows are located.  They are certainly not located in corn, which continued its pattern of sideways trade exiting to the downside, placing new lows, while wheat backed further into the lower end of ranges.   

Wheat struggled all week and finally let go to the downside as charts search for key support levels.  Prices today will open mixed as a combination of pricing and short-covering takes place.  Soyoil values look ready to challenge recent trading range highs which could bring some support to beans.  Meal appears ready to challenge recent trading range lows on unexpected deliveries.  

Spreads continue to dominate in terms of overall volumes as Jan contracts continue to roll forward.   January bean total open interest is now 240,721 contracts vs. March at 281,865 contracts.  March meal open interest stands at 160,128 contracts. vs Jan at 112,385 contracts.  March soyoil open interest now stands at 204,231 vs. Jan at 108,940 contracts.  

Markets continue to be a bit skittish as we near the Dec 15 tariff deadline.  Financial media sources said Trump is expected to meet with top economic staff today to discuss the tariffs on Chinese imported goods.  China's Commerce Ministry did not comment on the tariff deadline, but stated that both sides are talking.  

WEATHER

US is mostly dry, which will allow for continued harvest in the upper portions of the Midwest.  Favorable moisture conditions continue for beans throughout the majority of the growing areas of Brazil, though persistent rains may increase Asian Rust issues.  Above normal temperatures and limited rainfall in the northeast of Brazil (Bahia), continue to impact bean planting and development.  Dry weather continues in central Argentina, which will deplete soil moisture and increase stress on developing corn and beans along with slowing planting.  Weather for now is more bullish as the focus is on Argentine bean and corn production given the ongoing dry spell.

REPORTS

Export sales:

Beans:  2019/20 net 1.05 mt and 20/21 net 125,000 mt  (vs. an expected 500-1.1 mmt  good)

Meal:    2019/20 net 238,600 mt and 20/21 net 19,100 mt (vs. an expected 125-300 mt  neutral/good)

Soyoil:   2019/20 net 30,000 mt  (vs. an expected 8-30 mt good)

Corn:     2019/20 net 873,500 mt and 20/21, net 2,400 mt  (vs. an expected 400-800 mt  good)

Wheat:   2019/20 net 502,700 mt  (vs an expected 200-450  good)

Good sales around the board supported prices after the release.  Corn sales were better than expected with Mexico taking the majority of the business in what appears to be a slow-down in competition from South America.  Brazil corn supplies are tightening, and domestic prices there have risen.  Meal prices were also steady on a decent amount of sales, with soyoil sales also good as supplies tighten moving forward.  Good sales in oil are part of an up-trending market in oilshare and soyoil prices vs. meal.  Wheat sales were also better than expected but Black Sea and Russia still remain competitive.  

ANNOUNCEMENTS

Brazilian meatpacker JBS is in talks to import corn as domestic prices surge ahead of any harvest activity.  Argentina and Paraguay are the regular suppliers. 

Strategie Grains forecast a drop in 2020 soft wheat production while expecting corn, durum wheat, and barley to increase.  Excessive rains led to delayed planting of winter wheat, most notably in France and Britain.   They are forecasting total grain production to rise to 310.1 mmt vs. 309.8 in 2019.  

BUSINESS

Egypt canceled its tender for soyoil and sunflower oil.  

DELIVERIES

Soyoil:  23

Meal:  414

Corn:  79

CALLS

Calls are as follows:

beans:  3-4 lower

meal:  .60-.80 lower

soyoil:  15-20 higher

corn:  1 higher

wheat:  steady/lower

OUTSIDE MARKETS

Features a still lower US dollar, trading down to 97.08, as the Fed holds interest rates steady.  Policy makers indicated that they did not see any changes in rates until 2021. The Dow is off 40 pts.  

TECH TALK

• March corn prices continued the pattern of trading sideways/lower.  After being unable to sustain a price over $3.80 for any time, the market finally broke to new lows at $3.71 1/4, which sits just above contract lows at $3.65 3/4.  Prices still have to verify that they can hold, but would now look for a test of contract lows.  
• March beans try to maintain trade over $9.00, and think prices are probably heading for an $8.95-$9.20 trading range.  The chart appears open to a test of $8.99-$9.00, which should hold.  
• March meal heads into a $295.00-$305.00 trading range, and comes close to major support at $298.00.
• March soyoil is in a congestive phase after a two-day vertical advance upward towards the highs in Oct of 3244c.  Because of the straight up recovery from triple lows of 3040-3050c, the pattern forming looks a bit like a bull flag, which suggests that prices could break through key resistance at 32c at some point.  
• March wheat prices continue to weaken, though $5.11 offers very strong support, and under that would be covering any short at $5.05 which is the low end of this trading range.  

MARCH CORN

Major direction is sideways/lower, and each consistent rally attempt has failed.  The ADX trend is slowly strengthening suggesting that more traders are looking for potential sell spots.  Today, resistance is lowered to $3.75/$3.77 providing that level of resistance.   The market has formed a new down-trend channel, and the best lines of visible support cross below the market still with a test of ctr lows at $3.65 3/4- $3.66.  Would look for a possible $3.60/$3.65 trading range to form with highs at $3.80/$3.85 on the upper side.  

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