THE OPEN
March beans: 2 higher
March meal: .40 higher
March soyoil: 20 higher
March corn: 1 3/4 higher
March wheat: 4 1/2 higher
The markets opened the day on a firm note as called, but bean prices quickly turned two-sided with March meal dropping to new lows triggering sell-stops. Buy grains/sell soy trade emerged, with wheat rallying. March wheat maintained strength on a technical basis, while oilshare firmed on meal weakness vs. soyoil price strength.
SOY
- The soy complex trade was choppy, with funds selling beans and meal from the opening bell. March beans traded down through $9.50 again, while March meal sliced through key support at $300.00, triggering sell-stops and a move to the lowest end of the trading range.
- Fund selling in meal was met with good commercial pricing activity. March beans remain stuck in a trading range at recent market highs, but the short-covering seemed to dry up this morning.
- Trade talk has it that China continues to purchase Brazilian beans as early supplies start to come to the market, and in fact they are 10-17c cheaper than the US.
- Trade chatter also has it that China has now gotten a fair amount of coverage for the first half of the year heading into a trade deal signing.
- In terms of SA bean production, Brazil's AgroConsult estimated the size for Brazil's 2019/20 bean production at 124.2 mmt, vs. 124.0 mmt in Dec.
- March crush fell to 98c/bu while oilshare traded to 36.57%.
- Meal spreads were wider with March/May trading out to $4.50 from $4.30.
- March soyoil futures were higher on the day, but the top at 3495c created a third point of resistance, which elicited more profit-taking from the recent soyoil bull.
- Key support for March soyoil remains at 3440c, and trade underneath will find more sellers, as in beans today.
GRAINS
- Corn prices saw some stabilization but still struggled against the 100-day moving average located at $3.87 in March.
- Argentine corn prices remain cheaper than the US by 20-22c, leaving the USDA to have to probably lower its export figure in tomorrow's report.
- Technically speaking, a well-defined $3.71-$3.91 trading range has emerged in March corn, but struggles up against resistance remains. The March corn price action has an easier time breaking to new lows courtesy of a fund net short of 120K futures / options combined.
- Fund buying was triggered in wheat as yesterday's outside day closing higher gave way to further gains today. Ideas that wheat may be included in China's shopping list helped prices to climb higher.
- Technically speaking, wheat and soyoil continue to dominate the bull market space, as funds establish solid net long positions heading into the report.
- The wheat/corn spread strengthened as wheat gained on corn, trading up to 1.79c from 1.69 1/2c. July/Dec corn was slightly wider trading from 2c out to 3c, while May/May corn traveled back out to 7c. KC wheat prices were higher than Chicago as index fund re-balancing continues.
AT 12:00 THE MARKETS ARE AS FOLLOWS:
HI LO
March beans: 5 lower 9.54 1/2 9.40 3/4
March meal: 1.50 lower 303.00 299.20
March soyoil: 4 higher 3495 3457
March corn: 1/4 lower 3.87 3.83 1/4
March wheat: 7 higher 5.64 5.52 3/4
March canols: 2.50 higher 484.20 479.20
OUTSIDE MARKETS
The Dow is up 92 pts. and continued on to record highs again today. Crude oil traded down to lows at $58.66/barrel, while the US dollar strengthened to 97.55.
CLOSING COMMENTS
Aside from wheat, it certainly felt as though some were worried that the report may not yield a rally as expected, even though yields/production figures may head lower. Defensive price action in beans and meal resulted, and one has to wonder if it is a foreshadowing into tomorrow's report. In that beans are at the upper end of trading range activity, probably not a bad idea to let go of something if long, and keep the rest if the report is more bullish than expected. If prices break hard after the report, it could encourage China to come in and do some shopping sooner rather than later.
Trading ranges now remain well defined, and what the funds do with their positions will be key to what happens down the road:
March beans: $9.15 - $9.60
March meal: $295.00-$310.00
March soyoil: 3440c - 3550c
March corn: $3.71-$3.91
March wheat: $5.25-$5.60
As a reminder, index funds are re-balancing their portfolios from the 8-13, and are doing the following, which they advertise in advance:
- buy 5000 meal
- sell 17,000 soyoil
- buy 14,000 KC wheat
- buy 13,000 corn
TAGS – Feed Grains, Soy & Oilseeds, Wheat, North America
Corn, soybeans and soyoil all closed lower after trading up the previous three sessions. July soymeal made it a fourth trading session higher, and wheat remains on a tear with a fifth trading session closing higher. The mood around wheat sees supply concerns developing in North America and in t...
Cow-calf producer margins are discussed less frequently in these pages than their downstream counterparts of feedlot and beef packer margins, but this doesn’t mean they are less important to understanding the beef industry’s current state and outlook. Additionally, discussion of thi...
Reigniting a Transatlantic Deal Former Italian prime minister Enrico Letta is something of a policy rock star after authoring a report on the future strategy for the EU. Most of the 146-page report focuses on strengthening the EU’s internal Single Market but, buried at the end of th...
