THE OPEN
Jan beans: 3 1/2 lower
Jan soyoil: 19 lower
Jan meal: .70 lower
March corn: 1 lower
March wheat: 3 1/2 lower
The markets opened as called but once again the path of least resistance was lower. Trade talks don't have a set date, and until there is clarity on policy changes, growing conditions and world supply will retain center stage, as will technical action, which up until now has not been supportive.
SOY
- The bean market opened on its lows and continued to accelerate to the downside as funds came out selling.
- Jan beans broke to target lows closer to $8.80, March lows just under $9.00 as sell-stops were triggered.
- The weaker Brazilian Real, which traded to new lows, brought hedge pressure from farmers getting a better exchange rate. Later in the morning, the government intervened in the currency market.
- Spreads were also wider with Jan/March trading out to 14 1/2c from 14 1/4c.
- Jan soyoil prices continued to leak lower on long liquidation, with palm oil charts putting in a reversal signal even as a topping formation in Chicago futures seems to have been confirmed.
- Jan meal triggered sell-stops under $300.00, and without much back support traded down to new lows at $295.00.
- Meal spreads were weaker, with Jan/March trading out to $3.50 from $2.80.
- March crush margins were still good trading to 1.00c/bu while oilshare values traded higher to 33.84% as meal prices slid to new lows. Buy soyoil/sell meal emerged mid-session as meal cracked the $300.00 level, stopping the slide in Jan soyoil just beneath the 3030c level of trade.
GRAINS
- Buy corn/sell bean and wheat trade emerged to keep corn values well supported during the trading session as the March contract once again tested key support at $3.78. Basis levels remain firm, with selling ideas well over the market, and pricing ideas still lower. Thus, the stand-off in March corn remains as prices trend sideways from lower.
- World corn supplies remain ample, though South African corn estimates remain lower after a drought, down 10% from last year. The South African government committee forecast this year's corn crop at 11.19 mmt vs. 12.51 mmt last. Additionally, there are ideas that this year's corn supply from South America could be smaller. According to AgriCensus, corn exports from Brazil for the third week of the month slowed to just 500,000 mt to take the total for the month to 2.605 mmt.
- March corn continues to congest in a tight $3.76-$3.83 sideways range. Dec/March corn trades back out to 11c from 10c this morning, with March/May trading from 5 1/2c out to 6c.
- Wheat prices setback and congest within yesterday's range, with KC losses twice that of Chicago. The March wheat/corn spread corrected down to 1.47 1/2c from 1.53c. March wheat setback to key support at $5.25 where it found some short-covering and buying interest. In terms of wheat negatives, Canada ended its largest rail strike in a decade, according to Reuters.
AT 12:00 THE MARKETS ARE AS FOLLOWS:
HI LO
Jan beans: 8 lower 8.95 8.82 3/4
Jan meal: 3.50 lower 301.20 296.70
Jan soyoil: 13 lower 3066 3028
March corn: 2 1/4 lower 3.80 3/4 3.78 1/4
March wheat: 4 lower 5.32 3/4 5.25 3/4
Jan canola: 2.80 lower 459.00 456.50
OUTSIDE MARKETS
The Dow is up 30 pts. and has been higher all morning in light volume trade. Crude oil remains well bid at $58.56/barrel, while the US dollar falls to 98.25.
CLOSING COMMENTS
When the funds begin a selling campaign such as what we see in beans, the only question becomes what are they looking for in terms of target lows? Some of those lows may have now been met, as funds extend their short positions.
Funds still see no reason to cover or pay up for corn, which meanders back and forth. There were more reports of increases in commercial pricing activity today, which was basically an exchange of ownership from fund sales into commercial hands. That should keep meal supported at current lows, with beans getting so oversold that a correction could be in the offing. If short, this seems to be an excellent time to take something off the table. While grains have pulled back today, would not be surprised to see higher grains help beans to find a soft landing. Even soyoil, which has been in freefall, may find a steady trade as the Jan contract gets closer to 30c.
From the FYI Department:
According to the Soybean and Corn Advisor as released by Michael Cordonnier, there is the possibility that some Brazilian farmers may not plant all the Safrinha corn intended, the result of delayed bean planting in states such as Mato Grosso do Sul, Parana, Goias, and Minas Gerias. Hedging that bet, Cordonnier went on to say that corn prices are attractive now in Brazil, and may move even higher due to the weaker Brazilian currency, strong exports, and strong domestic demand.
Have a good evening........
TAGS – Feed Grains, Soy & Oilseeds, Wheat, North America