THE OPEN
March beans: steady
March soyoil; 42 higher
March meal: 1.00 lower
March corn: 1/2 higher
March wheat: 3 1/2 higher
The markets opened as called with prices hitting new contract highs in soyoil on the back of a friendly palm oil market trade. It was a risk-on day across the board, though crude oil broke in the latter half of the session. Corn prices, which had been on the radar as everyone's sell leg, found support on a round of short-covering as well. Wheat prices were higher, which helped corn to put in gains. Beans were higher as they have sometimes correlated with the Shanghai stock market, fueled higher today by news out of China that the central bank would be pumping $115 bln worth of stimulus into the financial system. The People's Bank of China cut the reserve ratio for commercial lenders by 50 basis points, freeing up credit ahead of the Chinese New Year.
Technically, charts support levels continued to build as new highs for wheat, beans, and soyoil were hit.
SOY
- The soy complex opened as called with the feature of the morning being higher soyoil prices staging a move to new contract highs again at 3567c. Profit-taking in soyoil was noted as well as relative strength index prices continued to flag overbought at 75% (anything over 70% is overbought), and positions continue record long, particularly as a percentage of total open interest.
- Nonetheless, the high palm oil prices triggered a higher trade that also underpinned beans.
- March beans found a bid from the open which finally took prices over the top of an uptrend channel and into new highs at $9.61 where the first line of technical resistance was located.
- March meal prices found an early bid as well on fund short-covering as well as commercial pricing activity, but the gains were modest compared to soyoil strength.
- March crush values popped higher after the open, back over 1.00 c/bu to trade to 1.04c/bu, while oilshare improved to 36.48%.
- Bean spreads narrowed with March/May trading into 12 1/2c from 13 1/4c while Jan/Mach narrowed back into 11 1/2c from 12 1/2c.
- Meal spreads firmed as well with March/May trading into $3.50 from $3.90. At midday, prices remain firm for the soy complex, suggesting that the day could end with decent gains.
GRAINS
- Corn and wheat markets continued in higher trade as charts remain mostly constructive.
- March corn had the least constructive narrative to it but improved that outlook today as prices reacted firmly as more shorts covered in some of their short position.
- March corn traded from the lows of the sideways range at $3.87 to the highs last at $3.92, but found only light selling interest as producers are looking for still higher levels before stepping in.
- March wheat continued on its path of higher trade as well with KC and Minn. also higher for the day. Technically pullbacks in wheat continue to hold, which suggests that $5.50 is a new point of support in a market yet to put in its overall highs.
- March wheat finally traded just past previous highs of $5.64 1/2, triggering buy-stops and a new high for the market at $5.67 1/2.
- Corn spreads remained firm with July/Dec trading from even out to 1 1/2c, while March/May traded from 7c carry into 6 1/2c.
AT 12:00 THE MARKETS ARE AS FOLLOWS:
HI LO
March beans: 3 3/4 higher 9.61 9.53 3/4
March meal: 2.60 higher 307.50 303.00
March soyoil: 42 higher 3567 3511 **new ctr highs
March corn: 3 1/2 higher 3.92 3.87 1/4
March wheat: 3 higher 5.67 1/2 5.58 1/4
March canola: 3.10 higher 481.50 475.70
OUTSIDE MARKETS
Crude oil traded both sides of unchanged today as current bulls decided to book some profits on the recent price rise over $60/barrel. The US dollar in recent days fell to 96.35, the lowest trade since July 1, which is net positive for commodities in general, and wheat specifically. The Dow continues to generate gains, up 160 pts at midday, keeping its gains.
CLOSING COMMENTS
The markets posted new highs on technical follow-through but also found some who were willing to book a profit up at the new highs in wheat and soyoil. The shopping list for China remains under wraps, which may become problematic as prices work higher and higher. South American growing potential remains high, which suggests that if upper targets are attained, ie March beans at $9.70, March corn at $4.00, and March wheat at $5.70, it could become time to take something off the table.
Technically speaking, there is no reversal signal that tells us prices will break. So far, the market rallies, aside from soyoil, have been slow and steady. But if long, probably not a bad idea to take something off the table now into Friday (particularly a New Year Friday) but keep the rest as prices do not seem willing to back down for today. Would look for choppier trade next week as we draw closer to the Jan 10 report.
As a reminder -- - Nov crush estimates at 2:00 PM includes a 176 mln bu est. vs. 187 mln bu in Oct, and vs. 178.1 mln bu yr ago, with oil stocks estimated to increase slightly by 20 mln lbs. to 1.840 bln.
Export sales will be released tomorrow.
TAGS – Feed Grains, Soy & Oilseeds, Wheat, North America
The CBOT was mostly lower to start the week with a rising U.S. dollar and favorable weather for the U.S. and South America pressuring values. Some jitters over the weekend developments in the Middle East also kept markets on the defensive, though crude oil prices slipped lower despite the incre...
House Agriculture Committee Chairman Glenn Thompson (R-Pennsylvania) has stated that he will move a farm bill draft out of committee in May; the Ranking Minority Member, David Scott (D-Georgia) has indicated that he’ll work with Thompson to have a bipartisan timeline to work on the legisl...
Update for 1 April 2024: Last year, users pointed out differences between the 5-year averages reported in this app and what USDA estimates in its weekly report. The difference exists because WPI calculates average based on the last 5 years of observations for the current week. In cases where ob...
