Markets will close at noon today for President Carter’s National Day of Mourning.
Markets are mixed this morning with beans leaking lower while corn and wheat have chopped on both sides of unchanged.
Export sales will be delayed until tomorrow.
Weekly EIA data showed ethanol production down 9k bbls per day to 1,102k bbls. Stocks were up sharply again, adding 509k bbls to 24,148k bbls. Weekly production of 324m bbls is still above the ~310 necessary to hit the USDA’s current corn usage forecast.
Managed funds on Wednesday were estimated as sellers of 4k corn to reduce the net long to 226k, net sellers of 1k beans to push the net short out to 49k, and net sellers of 2k wheat to push the net short out to 94k.
The U.S.$ has returned to recent highs, which has been a thorn in the side of the U.S. wheat market.
Persistent dryness in S. Brazil is raising concerns about the size of the bean crop in Rio Grande do Sul, which is expected to harvest nearly 20 mmt of beans.
Harvest has begun in Brazil’s largest producing state of Mato Grosso with the state expected to produce 44 mmt of beans. Wet weather slowed the start of planting and now there are some concerns that excessively wet weather could slow harvest.
China said they would accelerate the breeding of new soybean and corn varieties and prioritize yield improvements for key crops in a broad effort to ensure food security.
A climatologist for the Buenos Aires grains exchange said mid-January rains“ should bring relief to soybeans and corn in the core farm region hit by a recent dry spell”.
Brazil soybean exports for January are expected to be down 30% from a year ago due to a slow start to harvest, but total for next marketing year is expected to be record large as their anticipated record crop hits the market.
Corn posted a higher high and higher low on Wednesday, but prices finished lower with the market dropping through trendline support overnight. Directional indicators are neutral and the market is balanced ahead of tomorrow’s USDA numbers.
Traded an inside day on Tuesday with prices bouncing from trendline support to finish the day in the upper end of the range and with small gains. The market corrected the overbought condition. Support is 4.50 and 4.40 with resistance is 4.55 and 4.60.
Beans posted a bearish reversal from intraday highs yesterday with prices testing recent lows overnight. Directional indicators are turning more bearish and the market is balanced. Support for March is 9.80 and resistance 10.00.
Corn pulled back from recent highs yesterday as the market is looking like it will be well-balanced ahead of tomorrow’s high-risk crop report. Prices remain in the upper end of the price range we’ve seen over the last several months and managed funds are sitting on a large net long, which in the past with similar supply/demand fundamentals, is where their position has peaked. There are some concerns about 2nd crop planting pace in Brazil and dryness in Argentina, but the market has added some risk premium over the last several weeks. From a risk management perspective, it makes sense to make sure sales are caught up and to consider zero-cost option structures to cover the downside risk on unsold bushels.
Beans pulled back yesterday with talk of mid-January rains for Argentina weighing. Regardless of how much people want to focus on dryness in Argentina, the elephant in the room is the record crop in Brazil. With global supplies likely headed to burdensome levels, producers should use puts to cover the downside on unsold bushels.
Corn up 1
Beans down 4