THE OPEN
Jan beans: 4 3/4 higher
Jan meal: 1.50 higher
Jan soyoil: 21 higher
March corn: 3/4 lower
March wheat: 1/4 higher
The markets opened higher in the soy complex as shorts took the opportunity to cover beans and meal. Meal prices led the way in terms of strength as traders sold oilshare. Buy soy/sell grain trade dominated with wheat learning heavy all day on fund selling pressure. Dryness in Argentina, good crush numbers, and oversold conditions fired up the soy complex which stayed in positive territory for much of the day led by meal.
SOY
- Beans and meal put in a constructive day of trade on the back of technical buying activity spurred on by oversold charts and potential dryness in Argentina. Charts finally worked over levels of key resistance, which in March beans was $9.00 and Jan beans $8.83.
- Meal prices staged the best corrective price action as the January contract traded back over $300.00 triggering buy-stops and running prices sharply higher.
- Jan soyoil prices trended lower as bulls sold oilshare early with prices near trendline resistance towards 3080c, despite a very positive day of trade for energies and the palm oil market.
- March crush traded to 1.10c/bu which helped meal to rally, while oilshare traded back below 34.0% to trade to 33.50%.
- Meal spreads narrowed into $2.50 from $3.20 while bean spreads still remained fairly wide. Jan/March beans traded from 14 1/4c to 14 1/2c and March/May from 14 1/2c to 15c.
- The Brazilian Real, which had firmed a bit, still remains extremely cheap and adds to more farmer selling as prices rally.
- Building concerns over Argentina's drier weather pattern fed into today's rally, but the higher momentum was mostly a technically-based rally built off oversold extremes and the need to get some housecleaning done, if only to allow funds to sell the market anew at higher levels.
GRAINS
- Buy corn/sell wheat trade was the feature in grains.
- March corn started the day once more by testing key support at $3.77, which again held firm even as beans put in a good rally. Buy bean/sell corn trade emerged as a feature as the planting season price ratio heats up. Corn spreads were slightly weaker with Dec/March trading out to 10c, while March/May moved out to 6c from 5 1/2c.
- A poor export sales report weighed on wheat, as the low numbers suggested that recent strength in this market has priced US origin out of the market. Chicago and KC wheat lost to Minneapolis, which was higher as funds unwound previous spread trade. Wheat continued to lose to corn with the March wheat/corn trade moving from 1.44 1/2c to 1.51 1/2.
- The lack of deliveries for Chicago wheat continue to be supportive, but for the day the trade turned extremely technical as nervous longs elected to opt out for now. All in all, grains were mostly ignored as funds took to adjusting short positions in the soy complex.
AT 12:00 THE MARKETS ARE AS FOLLOWS:
HI LO
Jan beans: 10 higher 8.88 3/4 8.77 1/4
Jan meal: 6.30 higher 303.30 295.60
Jan soyoil: 4 higher 3078 3038
March corn: 1/4 higher 3.79 1/2 3.77
March wheat: 3 lower 5.30 5.22 3/4
March canola: 3.00 higher 465.40 461.30
OUTSIDE MARKETS
The stock market started the day up 90 pts, but prices soon turned lower after Nancy Pelosi announced that impeachment proceedings would move forward. Stocks traded either side of unchanged. Crude rallied as OPEC meetings continue, and cuts may soon be coming.
CLOSING COMMENTS
Don't know if it was more surprising to see how low beans and meal traded, or how long it took for them to recover, but solid price action finally took place and that may have trapped some shorts at market bottom. Beans were throwing off clues for a recovery when they did not respond to negative trade talk rhetoric over the last week, or to a negative export sales number this morning. There are now probably around 50K bean shorts and 40K meal shorts that are closely watching technicals, as pullbacks have been well bid all day. As good a trade as beans and meal have had, however, is about as poor as wheat has, as old longs decide to get out, taking corn along for the ride since it has shown little willingness to follow soy.
Nearby upside targets for March beans is now $9.10, and for Jan beans $8.95 on further short-covering activity.
Aside from wheat, the other markets still remain closer to trading range lows in the big picture, so further advances could be noted for beans and meal. Look for these markets to maintain a solid bid into the close, while wheat may trigger sell-stops at important levels that could result in a larger setback.
TAGS – Feed Grains, Soy & Oilseeds, Wheat, North America
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