THE OPEN

March beans:  4 ½ higher

Jan meal:  0.90 higher

Jan soyoil:  3 lower

March corn:  ¾ higher

March wheat:  1 ½ lower

The markets opened as expected with the soy complex once again steady vs. weaker grains led by wheat into the 11:00 CT report. Soyoil futures were well supported, which spilled over into beans. Corn prices continued to churn at recent trading range lows. The Wall Street Journal wrote in an article that both the U.S. and China have signaled that Dec. 15 may not be the final date for a phase one deal, but officials from both countries indicated they are looking to delay tariffs.  

The USDA WASDE report was released at 11:00, which found prices unwinding last week's buy soy/sell grain trade initially, with steady to better prices post numbers.

At 11:00 the December WASDE was as follows:

U.S. ENDING STOCKS (Million Bushels) 2019/20

                Dec   Average      High       Low       Nov

Corn           1,910     1,859     1,960     1,479     1,911

Soybeans         475       472       522       345       475

Wheat            974     1,000     1,050       913     1,014

 

WORLD ENDING STOCKS (MMT) 2019/20

                           Dec      Avg.      High       Low       Nov

Corn              300.6     295.6     298.2     292.0     296.0

Soybeans        96.4      96.2     101.9      94.0      95.4

Wheat          289.5     286.3     288.5     283.9     288.3

The report was mostly neutral with production for beans / corn and yields left unchanged.  Wheat futures turned higher creating some short covering in corn.  Oilshare was higher which helped to support beans.  

The largest change was to the wheat ending stocks number, which was lower than expected.  

Soybeans: Production was unchanged at 3.55 bln bu. with yields unchanged at 46.9 bpa.  Brazil left its bean production unchanged at 123.0 MMT. and Argentina at 53.0 MMT.

Corn: Production was unchanged at 13.66 bln bu, with the average corn yield unchanged at 167.0 bpa.  Global corn numbers were higher with increases in China, Bolivia, and Taiwan.  Total global corn demand increased slightly to 1,127.23 MMT, up from 1,126.27 MMT in November. Brazil and Argentina corn production was unchanged from a month ago at 101 MMT and 50 MMT, respectively. Harvested US area was left unchanged at 81.8 mln acres, implying that changes would have to come from the January final.  Exports, ethanol, total use numbers were left unchanged.  The lack of a change to corn exports was more of a surprise, as many traders were expecting a decrease.  

Wheat:  Wheat inventories were 40 mln bu lower at 974 mln bu vs. 1.01 bln bu  as a result of  a 25-mln-bu increase in exports and a 15-mln-bu decrease in imports. In another somewhat surprising turn, world wheat numbers moved higher to a record large 289.5 MMT, with declines in Australia, Argentina, and Canada more than offset by increases in the EU, Russia, and China.

SOY

The soy complex put in congestion trade again attempting to make another run at new highs for the trading range into the 11:00 report but found that prices could not move above yesterday's high which elicited more profit-taking.  Jan soyoil futures ran up to trendline resistance at 31.80c before retreating post report.  Jan meal also attempted to move back over $300.00 but fell short of that, as traders continued to buy soyoil/sell meal.  March crush trades firmer to 1.03c/bu while oilshare firms to 31.59%.  The neutral report created some nervous profit-taking but shorts still seemed to want to own setbacks given the recent move to higher ground.

Jan/March bean spreads maintained a steady tone trading from 14 1/4c to 14 3/4c, while March/May beans narrowed into 13 1/2c from 14c.  March/May meal traded wider from $2.90 out to $3.20.  Heading into the last hour of trade, prices still remain firm which could promote another good close to build off of if a bull.  

GRAINS

Wheat and corn markets were mixed during the session, but post report grains saw a round of short-covering activity that helped to create more chart support.  March wheat took the lead after smaller ending stocks were revealed, but not before prices cracked to new trading range lows at $5.19 1/4.  Major support for March wheat was at $5.18, and therefore the report led to more fund short-covering and buying activity when released.  

Higher wheat helped corn to find support in the March contract just above key support at $3.74.  Traders are now going to look forward to the January report in order to see if lost acreage will be more defined.  After the report the March wheat/corn spread traded from 1.43 1/2c up to 1.51c.  March/May corn spreads were a touch weaker trading from 5 1/4c to 6c.  After the report, it was announced that Egypt purchased 355,000 mt of French, Ukraine, and Russian wheat.  

 

AT 12:00 THE MARKETS ARE AS FOLLOWS:

                                                   HI                               LO

March beans:  1 higher          9.16 3/4                      9.11

Jan meal:  steady                  300.20                         297.30

Jan soyoil:  11 higher            3180                           3136

March corn:  3/4 higher         3.77 1/2                      3.75

March wheat: 3 higher          5.28                             5.19 1/4

March canola:  .20 lower      469.40                         467.30

 

OUTSIDE MARKETS

The Dow opened 15 pts higher but at noontime is 10 pts lower as traders hone in on what may happen this weekend with tariffs.

CLOSING COMMENTS

As expected, the WASDE brought few changes and a limited reaction from funds.  Prices, therefore, appear ready to stay in trading ranges, which appear to still have more upside in beans and soyoil, and perhaps enough information to form some grain interim lows as well.  Next month's report may incorporate the last of the bushels sitting in the Dakotas for corn and beans, and deliver the question of where final yields are.  If short grains, it could be a good time to get something covered in, as the report in January is expected to be anything but neutral.  

Unless the grains close in negative territory, think that they are now beginning to perhaps just form some trading range lows.  If short corn and wheat, would probably think about booking something and keeping the rest in case chart stability fizzles.

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