THE OPEN
Jan beans: 14 lower
Jan meal: 6.60 lower
Jan soyoil: 25 lower
March corn: 4 lower
March wheat: 1/2 lower
The markets opened as called with a good bounce out of the wheat market stabilizing prices across the rest of the board. Short-covering was noted for the rest of the markets, with soyoil turning higher against meal briefly. Profit-taking was noted for the March wheat/corn spread, which was partially responsible for the wheat upside correction.
SOY
- The major feature in the soy complex was that of higher oilshare as Jan soyoil prices appeared to have met a cycle low at 3650c with a bounce back over 37c. Higher soyoil came on the back of firmer crude, which traded to $45.25/barrel.
- Jan meal prices held the critical $380.00 level in check, which helped beans to stabilize at overnight lows of $11.43. However, the bounce into the midday hour for beans does not seem to be a convincing one, as prices have still not been able to move higher from lower.
- Jan meal also shows that it has a combination of short-covering as well as liquidation on rallies with support at trendline at $380.00, but unable to hold over key resistance at $389.00. Jan soyoil trades both sides of even, but also slips into the red at midday.
- The nearby bean spread was still weaker trading from a small carry of 1/2c out to 2c, as export activity remains quiet.
- At midday, the soy complex seems to be struggling to hold rallies, which suggests that end-of -the day prices may continue to be in the red at close of day.
GRAINS
- The major feature in grains came from a strong rebound in wheat prices with both Chicago and KC sharply higher after the open. Profit-taking was noted for the March wheat/corn spread, with prices trading up to 1.70c from 1.60c and lows of 1.50c.
- The break in wheat was able to create a bit more demand with South Korea and Japan tendering. March wheat was oversold and due for a correction, and the rally towards $6.00 nearly defines its trading range from the low.
- March corn prices saw a good recovery which now puts the floor at $4.14/$4.16, a level that may be tested again but could hold. Dec/March narrows into 4 3/4c from 6 1/4c on the lack of deliveries, which creates spillover strength for March/May corn at 3 1/2c to 3 3/4c carry.
- US corn remains the most competitive and China is still expected to purchase more in the upcoming year. In the meantime, corn remains steady while beans tumble with the bean/corn ratio heading lower, which tells the producer to plant more corn.
- In the EIA report, ethanol production was down 1.7% to 974,000 bbl/day, which would consume 5.15 bln bu of corn. Ethanol stocks increased 1.8% to 892 mln glns, which would be the highest level since last June.
AT 12:00 THE MARKETS ARE AS FOLLOWS:
hi lo
Jan beans: 5 lower 11.64 11.42 1/2
Jan meal: 1.90 lower 391.20 380.90
Jan soyoil: 23 lower 3726 3657
March corn: 1 lower 4.24 1/2 4.14 1/2
March wheat: 9 higher 5.92 1/2 5.74 3/4
March canola: 1.30 lower 579.10 572.80
OUTSIDE MARKETS
The stock market is 130 pts lower in early trade but has traded both sides into midday as the rounds of vaccines head into effect. Crude oil trades up to $45.92/barrel, with the US dollar moving down to 91.10.
CLOSING COMMENTS
The markets are attempting to define value levels as funds sell into commercial pricing activity. Rallies now continue to offer up a chance to liquidate while end-users take advantage of breaks to get something on the books. China remains quiet for beans, with no sales noted in weeks. Not so for corn, where a few sales have been posted, and there is more chance of China needing to buy more. There is now a surplus of beans to China on the water, so beans take a nose-dive while corn heads lower with losses that are less in scope.
Technically speaking, the market has probably traded down to a value level where corn and wheat is concerned while beans search for the lows. The trade in the soy complex feels a bit "heavy", particularly for beans where bounces seem to be labored. Would look for this market to perhaps head lower again, but the $11.45 level has been a source of support before, and it could be again. Commercials are on breaks and funds are there as sellers on rallies, which is what defines trading range activity. If short, would still be looking for places to scale down cover, and if wanting to price think that this break is a good opportunity to do so.
Prices will leg down further if these support levels are now violated with a settlement underneath:
Jan beans: $11.35
Jan meal: $380.00
Jan soyoil: 3650c
March corn: $4.10
March wheat: $5.71
Until then, would price or cover a short accordingly.
TAGS – Feed Grains, Soy & Oilseeds, Wheat, North America