THE OPEN
May beans: 11 lower
May meal: 5.00 lower
May soyoil: 22 lower
May corn: 7 1/2 lower
May wheat: 11 1/4 lower
Prices opened lower and continued to slide throughout the session, triggering sell-stops. Funds were selling what they purchased yesterday. Charts are beginning to build in slightly more resistance levels that appear to be challenging. Buy soyoil/sell meal trade continues, as prices break but overall still remain in current ranges. Later in the session May soyoil traded higher on the day which helped bean prices to recover.
SOY
- The soy complex opened as called with buyers standing aside into fund selling activity. May beans trades back under $14.00 but finds support as May meal slides to the lower end of its current range. May crush trades down to 60c/bu while oilshare trades back over 37.29%. Soyoil continued to gain on meal during the session.
- May meal prices slid lower but once again found support at major trendlines, which for today was close to $413.40. As such, would not be selling meal into these current lows, but if needing to price would take advantage of these lower levels.
- Argentina is now competitive with US meal, which adds to the defensive market trade. Continuing worries about ASF also play into lower meal prices as well, and more buy soyoil/sell meal trade. Lower crush margins feeds into negative price action as well, as crushers will not crush for margins that are not attractive.
- November beans are trending into a rather well defined $12.00-$12.30 trading range, but the price action if more constructive which suggests a run up to current highs could easily take place. Nearby spreads were firmer with May/July trading to a 16 1/2c inverse from 14c, remaining well bid throughout the day. July/Nov bean inverse trades from 1.64 1/4c from highs of 1.73c.
- Meal spreads by contract continue to leak lower with the July/Dec inverse trading to $37.30 from $40.40. At midday, soyoil prices continue to hold in better vs. meal and beans, supported by higher crude and canola. May canola prices post double lows at $720.50, and more impressive back -to -back lows at $735.40.
- Egypt still attempts to complete its tender for 30,000 mt of soyoil, which broke 200 pts from the highs to a level that sparked demand.
GRAINS
- Grains traded lower during the session with corn and wheat markets trading back to key support levels. May wheat tests $6.50, while May corn prices edge back towards $5.30 where major support is located.
- A few worries for the corn bull include building chart resistance and lower Chinese corn prices in anticipation of higher corn acres to be planted. As a reminder, the last time the Chinese gov. encouraged farmers to plant more corn, the net result was an excessive supply that took years to draw-down.
- There is nothing extraordinary about today's price action, as commercial pricings continue to underpin corn prices while funds continue as net sellers today. Of note is that Argentina's corn prices are now competing directly with US origin.
- Spreads are weaker, indicative of more liquidation, with July/Dec corn inverse leaking to a 51c low from 56 1/2c. Charts are turning slightly more bearish, and small bumps in corn prices seem to find willing sellers, which implies a low-end close for the day.
- The EIA report was mostly as expected, with a return of overall production along with a small drawdown in inventory. Production was up 22.5% WOK, to 849,000 bbl/day, which would consume 4.5 bln bu of corn. Inventories were down 1.6%, slightly less than the advertised guess, to 942 mln glns.
- Wheat prices remain a chart-based trade, with today's prices closing in on major support at $6.50 with the 50-day moving average at $6.49.
AT 12:00 THE MARKETS ARE AS FOLLOWS:
HI LO
May beans: 9 lower 14.17 3/4 13.95 1/4
May meal: 4.40 lower 423.80 415.70
May soyoil: 4 lower 50.03 49.25
May corn: 11 lower 5.44 1/4 5.32 3/4
May wheat: 14 lower 6.66 6.50 3/4
May canola: 5.40 higher 759.40 752.10
OUTSIDE MARKETS
Stocks open and trade either side of even, currently up 100 pts at midday. Crude oil trades to $61.99/barrel, with the US dollar trading to 91.06.
CLOSING COMMENTS
The theme of choppy March price action continues. Prices are now all about congestive trade heading into next week's March WASDE report. Soon it will be all about US acreage and weather.
Technical levels are in definition, but major trends remain sideways/higher. Corn remains lower today vs. beans, as the latter has the tighter balance sheet for now and cannot afford to give up much ground. The choppy price action is indicative of market trading ranges, so would not sell at the lows or chase the highs. Could now straddle or strangle ranges which appear as such:
May beans: $13.80-$14.30
May meal: $415.00-$435.00
May soyoil: 4850c to 51c
May corn: $5.25-$5.60
May wheat: $6.30-$ 6.75
Look to remain in consolidation time heading into new data on March 9, (WASDE report), with the biggest market mover at month's end, which includes March stocks and the all- important farmer survey in the Planting Intentions report.
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