THE OPEN
March beans: 1 3/4 lower
March meal: .30 higher
March soyoil: 52 lower
March corn: 1 lower
March wheat: 1/4 lower
The markets opened as called with bean prices hopping to the upside of even and corn prices falling into sell-stops. Buy bean/sell corn trade was the feature of the day, which prompted ideas that traders may be thinking along the lines of a friendly USDA report for beans, and more neutral to bearish for corn. The pattern in 2019 found the market reaction leaning that way on many of the USDA reports. Profit-taking continued in oilshare with soyoil following a weaker palm oil market. Palm oil prices took a time-out from the rally with caution due to the US/Iran conflict, with some traders moving to the sidelines.
At 10:00 export inspections were released as follows:
beans: 963,830 mt vs. 991,801 mt week ago (vs. an expected 750,000 mt)
corn: 550,930 mt vs. 408,946 mt week ago (vs. an expected 500,000 mt)
wheat: 345,109 mt vs. 312,090 mt week ago (vs. an expected 400,000 mt)
Inspections were slightly better for corn this week, while wheat was lower than expected. Corn is still running behind last year's pace, while wheat/beans remain ahead.
SOY
- Beans and meal prices enjoyed a market bounce, with more short-covering in beans on ideas that the Chinese /US phase one deal would be inked despite current geopolitical tensions with the US/Iran.
- March soyoil prices worked lower as funds continue to hold record length, and over 20% of total open interest. At the midday hour, March soyoil posted a trading range low of 3448c, which may become a good support level for another market rally back over 35c.
- March crush traded to 1.02c/bu while oilshare fell to 36.20%.
- Bean spreads were firmer on the recovery rally with March/May trading into 13 1/4c while July/Nov narrowed into a 2c carry from 4c.
- March meal found good support once again as prices neared the $300.00 level from funds covering shorts as well as commercial pricing interest. March/May meal firmed into $3.70 from $4.00.
- March beans followed higher meal with ideas that the pullback took prices closer to major support levels established last week, which keeps the uptrend intact. So far, the chart reinforces support in the lower $9.30's, though would still look for a mostly sideways trade into Friday's data.
- Buy beans/sell corn may be a continued theme, particularly given the slant of chart price action as of today.
GRAINS
- Grains worked lower today with corn prices closing into key support, which is never positive, and therefore triggering sell-stops under $3.85.
- Funds returned as net sellers to the corn market on ideas that the Dec 1 corn stocks may be more neutral to bearish, and that perhaps corn may not be included in the phase one deal.
- There was a good amount of commercial pricing activity as corn fell to new lows for the move down, but the March corn chart took on a more bearish outlook given today's break.
- Funds may choose to sell corn rallies now while beans remain a sideways trade.
- March wheat followed corn but overall the price action was more congestive around the $5.50 level.
- Corn spreads were weaker with July/Dec trading out to 2 1/4c from 1 1/2c while March/May traded from 6 1/2c to 6 3/4c.
AT 12:00 THE MARKETS ARE AS FOLLOWS:
HI LO
March beans: 5 higher 9.48 9.38 1/4
March meal: 3.00 higher 304.50 300.60
March soyoil: 53 lower 3518 3448
March corn: 1 lower 3.87 3/4 3.82 3/4
March wheat: 4 lower 5.55 1/4 5.46 3/4
March canola: .40 higher 479.70 475.80
OUTSIDE MARKETS
The Dow opened 170 pts lower but is off only 57 pts at midday. Crude backs off to $62.81/barrel, while the US dollar falls to 96.54. Gold prices are off their highs as well.
CLOSING COMMENTS
Professional traders have been selling March corn each time prices traded above $3.90, and the selling again today tipped the charts from sideways into negative territory. The theme of the day could be the theme of the week, namely buy beans and sell corn into Friday's report. The pattern of the last few reports has been for corn to find weight moving into the report while beans remain firm. Post data beans have had the edge to the upside. Beans also may see support from better technicals, (as long as prices stay over $9.30 for the March contract), and the fact that so far, the Chinese are arriving to sign the deal.
South American crops are still on course to yield a good production figure, and that is what prices will have to contend with into the Feb. and March time-frame. CONAB will update crop production on Wed. before Friday's USDA.
Would look for the continuation of trading range activity, with a close at $3.85 March corn and $5.50 March wheat more stabilizing than not despite today's break.
TAGS – Feed Grains, Soy & Oilseeds, Wheat, North America
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