THE OPEN

March beans:  9 1/4 higher

March meal:  2.50 higher

March soyoil:  13 higher

March corn;  2 1/2 higher

March wheat:  2 1/4 higher

Prices opened with an air of caution and quickly filled in small open PM session gaps.  Headlines continue to be digested with China confirming the phase one trade deal.  However, skepticism seems to be invasive across the board as the subject of potential Chinese buying activities for US goods remains largely unclear.   While the President stated that China would commit to buying $40-$50 bln of US Ag products, the Chinese seemed to balk at committing to a US dollar figure, instead saying the purchases needed to be based on domestic demand, under stress due to African Swine Fever.  According to the South China Post, China purchased $137 bln worth of agricultural good from all origins in 2018, while the US has never surpassed $30 bln of that total, coming closest in 2012.  Last year, US sales totaled only $9.2 bln.  

The uncertainty and run-up in prices created a choppy market both in the Ag space and in the stock market as well, with the S&P 500 fluctuating before and after the press conference around 11 times either side of even. 

SOY

• The major feature in the soy complex was once again higher oilshare led by soyoil which put in new chart highs, with March coming close to key trendline resistance at 3330c with a 3323c trading range rally.  
• March soyoil saw early support from higher palm, higher energies (crude up to $60/barrel), and higher canola.   
• As opposed to higher soyoil, meal continues to languish at the lower end of its trading range, testing moving averages close to $304.00, but easily trading back under $300.00 by midday.   
• March crush saw firm trading to 1.02c/bu while oilshare traded higher at 35.40%.  
• March beans entered into a choppy trade, posting a new high for the move up at $9.31 1/2 but also finding willing sellers from those newly long, as well as those who still are bearish considering higher acreage in 2020 and few problems arising from Brazil.  
• Time is also running out for US exports, and the classic Feb break that often occurs after the start of the year.  
• Spreads were still fairly wide with Jan/March beans trading from 13 1/2c to 14 1/2c, while Jan/March meal widened out to $4.60 from $4.20.  March/May meal traded from $3.40 to $3.90.  Short term, the bean basis has started to move sideways from higher. 

GRAINS

• Grains were also mixed for the day, with short-covering on corn's jump back to previous ceiling highs in March at $3.85.  
• The March corn market seems to have showed us its entire sideways trading range in two days courtesy of the trade announcement.   
• Better hedge activity was noted in corn on the rally, with wheat losing on the day vs. corn.   
• March wheat/corn traded from 1.53 3/4c down to 1.47 1/2c.   
• March wheat challenged key resistance at $5.36 1/4 but turned lower into the midday hour with fresh sellers on board.  Corn spreads were wider with March/May trading out to 7c from 6c.  March/May wheat traded from 2 1/4c to 3 1/4c.  
• Corn basis continues to hold up well with some strength today.  

AT MIDDAY THE MARKETS ARE AS FOLLOWS:

                                                                HI                         LO

March beans:  4 higher                        9.31 1/2                  9.16

March meal:  .70 higher                       303.40                    299.10

March soyoil:  25 higher                      3323                       3251

March corn:  steady                             3.85 1/2                  3.77 1/2

March wheat: 3 lower                          5.36 1/4                  5.25 3/4

March canola:  .60 higher                   472.30                    467.00

OUTSIDE MARKETS

The stock market started the day in positive territory, broke down both before and after the press announcement, and is mostly steady at midday.  Crude trades just over $60/barrel to $60.48/barrel, and is slightly lower near the halfway point.  The US dollar gains back some territory trading up to 97.20.  

CLOSING COMMENTS

Have to watch this one today, as a lower close would put reversal price action in place from early rally highs, although surprising if it happens. Choppy price action today is more typical of markets that are going to begin the process of grinding into trading ranges.  Prices get choppy at tops and bottoms, and we are seeing that across the board.  For beans, the trading range notched a bit higher as China may continue to buy what they need until SA supplies come on line.  Better exports suggest that corn and wheat could have found temporary bottoms, moving into wider ranges off the lows this week.  Soyoil could continue to run, but the price action today drove us into overbot territory.   Still, pullbacks will be met with interested buyers.  In the big picture, soyoil remains the true bull market as the rest are subject to pullbacks given negative traders who still have short bean and corn positions.  

The commitment-of-trader's report will be out tonight and should continue to show funds futures/ options positions holding a net short in meal of 50K, 90K in beans, and 120K in corn.  Funds hold a small long in wheat, and very long position in soyoil of close to 60/65K.  

FYI DEPARTMENT

Some weather forecasters are seeing more weather extremes for 2020 based on the sun-spot cycle, which will be at an 11-year low.  The last time sun-spots were that low was in 2007/08 when Australia had its last devastating wheat crop loss, with a starting point of 26 mmt, cut in half by harvest to 13 mmt.  

From Weatherbell Analytics comes the following:

The unusual weather will probably involve a violent switch from extreme dryness to extreme flooding.  In part, that will be driven by the effects of the regular 11-year solar cycle.  The number of spots appearing on the sun's surface is now at or near its 11-year cyclical low.  No, these blemishes are almost absent, and that occurrence has historically coincided with both cooler temperatures on earth and extreme weather variations.  

For this weekend at least, all seems quiet on the western front.

Have a good weekend.......

 

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