THE OPEN

March beans:  1 lower

Jan meal:  1.00 lower

Jan soyoil:  14 lower

March corn:  3/4 lower

March wheat:  2 1/2 lower

The markets opened as called with prices turning lower led by soybeans, which in turn pressured grains.    The weakness in the bean market surprised many traders, as there was not a fundamental link or trade story for the quick down-turn, which suggested that recent bulls were happy with the rally.  The confirmed announcement for beans seemed to only have provided a buy-the-rumor, sell the fact trade.  Spread trade continues to win the majority of the volumes with Jan contracts rolling to March or beyond.  

SOY

• The bean market turned lower today after closing just below recent trading range highs with some traders feeling that recent business transactions have now been penciled into higher price action.  Still, traders were more surprised by the negative turn in chart price action, though resistance from $9.15-$9.17 was beginning to build.  
• Jan soyoil futures turned lower as well following weaker price action from palm, with bulls taking profits on the noted failure at trendline resistance at 3180c.   
• Jan meal prices broke an uptrend channel support line at $298.00 that resulted in a sell-off back towards key support at $295.00.  
• The January roll continues, (often construed as price negative), with Jan/March beans trading into 13 3/4c from 14 1/2c, while Jan/March meal widened out to $4.10 from $3.70.  
• Oilshare continued firm with March trading to 34.53%, while crush firmed up to 1.00c/bu on bean weakness.   
• Would note that China is buying US beans on the back of favorable crush margins.  For the moment, US beans are cheaper, but the window for US exports will be closing during the Feb/March time period.  
• More rumors of bean biz surfaced today to stop a further break in March of the $9.00 level.   The other seller in the bean market has been the Brazilian farmer as the weaker currency this year increased forward selling.  It is estimated in published forecasts that the Brazilian farmer is about 50% sold on new crop beans.   

GRAINS

• Grain prices worked lower from the start of the trading session, with a relaxation of soy complex values weighing on grains.  
• March corn prices took the lead lower after a period of sideways trade and an inability to rally finally resulted in the break bears had been looking for.   
• Fund selling was met with good commercial pricing activity as prices worked towards contract lows in March corn at $3.65 3/4 with a new low approaching $3.70.  
• Large ethanol inventories were a negative for corn. 
• March wheat also broke lower after prices attempted to rally post December WASDE without success, leading to lower price action today, and sell-stops getting triggered at $5.18.   
• Seasonals for wheat turn lower by the end of December but seems like today was a jump-start on the process.  Spreads were weaker with March/May corn trading wider to new lows at 6 3/4c from 5 3/4c.  March wheat/corn traded from 1.46 down to 1.43c.  

AT 12:00 THE MARKETS ARE AS FOLLOWS:

                                                          HI                                  LO

March beans:  5 1/2 lower               9.16                               9.06 1/4

Jan meal:  1.90 lower                      298.30                           295.20

Jan soyoil:  24 lower                       3177                               3140

March corn:  4 lower                       3.77                                3.71 1/2

March wheat:  5 3/4 lower              5.23 1/2                           5.16 3/4

March canola:  3.30 lower              468.90                            464.60

OUTSIDE MARKETS

The Dow opened 60 pts lower and remains at that level into noontime.  The consumer price index rose to 2.1% annual pace in November from 1.8% in October, mainly due to higher energy and shelter costs.  

CLOSING COMMENTS

Funds sold beans and corn today as it seems the December report is out of the way, and the tariffs are ahead of us.  Funds want to be short and for the day charts tipped in their direction.  Larger plantings appear ready to happen for 2020 acreage, and that could be a bit of a justification for funds to hold onto shorts.  Argentina is dry, but that trend needs to continue with production losses in order to take prices higher. 

In the meantime, corn and wheat bears finally were rewarded for their patience as higher prices could never materialize and led to lower prices today.   The target low for March corn is now at contract lows given losses today.  

Bottom targets given today's price action if short and want to lift something:

March corn:  $3.65/$3.66

March wheat:  $5.05/$5.11

March beans:  $8.95/$9.00

While the break in beans was surprising, walking prices back in the March contract towards $9.00 is not a surprising technical feature, as once prices trade over a bench-march it often has to revisit it.  But more biz and bad weather in Argentina argues that if one is short and prices near $9.00, would lift something for now.  

 

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