THE OPEN

• May beans: 4 1/4 lower
• March meal: .20 lower
• March soyoil: 49 lower
• May corn: 1 1/2 lower
• May wheat:  5 lower

The markets opened lower as called with March soyoil and oilshare trading lower. China continues to add stimulus to keep its economy going which is translating to better stock performance today. The IMF announced that world growth would continue to improve despite the coronavirus. 

Technical trade continues in wheat, with funds long and grabbing headlines to justify their position. Buy meal/sell soyoil and buy beans/sell corn became the trade of the day, as wheat prices sat where they were for much of the day having tacked on huge gains yesterday. Later in the session bean prices tacked on more gains with continued bull-spreading as well in front of the USDA Outlook Forum numbers tomorrow.

SOY

Bean prices started the day lower but turned two-sided as meal prices rebounded against soyoil. The record crush report, largely ignored yesterday, was seen as a positive influence today in terms of market bean recovery. Good demand supported meal. The soy complex feature of the day was that of lower oilshare, as May prices broke through 34.0% to trade to 33.83%. May crush was off below 90c/bu down to 89.23c/bu. March soyoil broke through 30c to trade down to 2978c, where it bounced early in the day as shorts took the opportunity to cover, putting a triple low in place on the charts if prices can maintain trade over 30c. The Jan crush report which reflected huge soyoil stocks, back over 2 bln lbs, created the round of long soyoil liquidation post report. Oilshare continued to weaken for much of the trading session as meal prices strengthened against it on short covering into tomorrow's USDA numbers. Funds continue to carry a near record short in meal into the report. Beans followed meal for a change with shorts covering as prices traded higher from lower.  May beans held minor trendline support at $8.94 to eventually work higher for the day, back over $9.00. Spreads tightened with July/Nov moving into 6 3/4c from 9 1/4c. March/May meal traded from $5.30 out to $5.70. Nov beans hit double lows at $9.16 as prices trade from $9.15-$9.25. 

GRAINS

Wheat prices were lifted by any numbers of different stories, but the technical aspect of trade dominated, as the March ctr traded back over the dividing resistance line of $5.51 throwing prices into the previous higher trading range of $5.45 to $5.90. May wheat likewise held at key support at $5.40, with a bid under the market inviting more length to be added on. Stories include lower Australian and EU production, ideas that China could buy wheat, and a story from the UN which issued a threat regarding a huge swarm of locusts migrating across southwest Asia, on the doorstep of China's border. The threat was enough so that UN Food and Agriculture Organization warned of a significant threat to crops if the swarm invaded China. 

There was also chatter that China might have purchased a cargo of US wheat off the PNW. Corn prices were lower but sellers did not push the downside envelope, instead watching to see if prices would hold the line once more at key support closer to $3.76 March, and $3.82 in May. Spreads strengthened with July/Dec corn narrowing into 2 1/4c from 3 1/2c. The March wheat/corn spread traded from 1.82 1/2c down to 1.76 1/4c. The March /May wheat inverse traded from 3 1/4c to 1 1/4c. 

AT 12:00 THE MARKETS ARE AS FOLLOWS:

                                 hi                   lo

May beans: 3 higher             9.06 1/4              8.94 3/4

March meal: .40 higher            293.40               291.00

March soyoil: 31 lower            3052                 2978

May corn: 2 lower                3.87 1/4              3.83

May wheat: 8 1/4 lower           5.64                  5.51 1/2

May canola: 3.20 lower           470.70                466.50

OUTSIDE MARKETS

Stocks opened 66 points higher but tacked on gains of over 150 points by midday. Crude continued to strengthen trading up to $53.37/barrel, while the US dollar traded up to 99.69. 

CLOSING COMMENTS

The USDA Outlook Forum begins tomorrow. A Bloomberg survey puts the average guess for corn acres at 93.6 million with production at 15.196 bbu, and an average yield of 176.5 BPA. Bean acreage guesses are estimated at 85 million, with production at 4.248 bbu, and ending stocks quite ample at 533 mbu. Wheat acres are for 2020 are estimated at 44.9 million acres, with average yields at 49.1 BPA, and production at 1.86 bbu. Ending stocks for 20/21 are estimated at 830 mbu.

Traders continue to monitor flooding stages and some too wet conditions around the Midwest as we approach the month of March.

Expect trading range activity to continue as ideas circulate that China may not be purchasing anything until March. Seasonally prices tend to bottom out in Feb as the market factors in some potential weather premium.  Beans may bounce post SA harvest, but currently Brazil's bean harvest is only at 27.4% vs. 36.5% last yaer, according to Arc Mercosul. Once we pass the halfway mark, if the Brazilian Real strengthens on U.S. dollar/Real unwinding, look for prices to bean prices to strengthen further. 

Funds remain net short corn, beans, and meal, net long soyoil and wheat. The fund short is not that sizable and think that funds may want to be nimble moving into March and the beginning of the planting season. If short, would probably take this opportunity to lighten up on something, even soyoil which hit new lows but has been a consistent 30-32c trade. 

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