Corn breaks lower, soybeans slip and wheat struggles

Grain & Oilseeds Report

Corn: Monday made six straight days of selling, which might suggest a bounce is due soon but through the month of February it is expected that corn will continue to grind lower. For that reason, we see bounces as selling opportunities. Planting and weather concerns are the next potential bullish stories that we could see, but those are still too far away for hedgers to simply wait for. Bulls looking for a place to buy might see recent support in March of 678 as an attractive level to make a stand. Bears should continue to sell at least to that support and become more aggressive on bounces…Ryan Ettner
Soybeans: The soybean market continued Friday’s selloff today as the South American forecast was viewed a little more bearish than what it was going home on Friday. On top of the rain that fell over the weekend, there are two more shots of rain in the forecast of the next 10 days. If the rain falls as forecast, about one-third f the Argentina soybean belt will still be under dryness stress, down from a previous high of 50%.

After the hard sell off we have seen recently, the market looks pretty dismal, but exports still give the bulls some hope. Exports typically drop hard this time of year as end users shift demand to South America. With port delays already approaching the 50-day level, demand is staying strong for U.S. beans. There is talk that port workers in Brazil will be going on strike next week, and that could push even more demand back to the United States if the strike last too long.

The USDA has set an export goal of 1.345 billion bushels for this marketing year. We have sold 1.257 billion bushels year to date. So with 6-1/2 months left in the marketing year, we only have to sell 88 million bushel to reach the USDA target. We should easily eclipse that sales target.

Market bears point out that these sales could be canceled, so the export number is not as bullish as some want to talk up. The problem with this conclusion is that we have already shipped 1.002 billion bushels of the 1.257 that have been sold, leaving 250 sold bushels unshipped -- not leaving many bushels available to cancel. Monday's weekly inspections came in at 30.153 million bushels. This was below the trade expected range of 45 to 50 million bushels.

We are still recommending producers to be out of old crop inventory (excluding gambling bushels) by the time South America’s harvest is in full swing. Major resistance on the March soybean chart is at the $15 psychological level. If the market tests this level, we would recommended producers sell more inventory that they don’t want to risk into the summer. We would recommend producers who want to maintain ownership of beans into the summer use options to mitigate risk…Jim McCormick
Wheat: Bangladesh made a purchase of 50,000 tonnes of optional origin wheat. With a lack of new information, this market is struggling to hold on to gains. Currently, trade is focused more on the sufficient levels of wheat we have in the world and lack of speculation of the damage to the crop we could see in the spring. Though Friday’s report was friendly shorter-term wheat, the trade is looking at a forecast that contains a bit more moisture for the plains. We need to continue to focus on weakness in demand followed by weather…Cordon Sroka

About the Author

Ryan Ettner is a registered commodities broker and grains analyst at Allendale, Inc. Steve Georgy is a Sr. Broker/Manager at Allendale, Inc. Jim McCormick is Senior Broker/Manager at Allendale, Inc. Allendale is registered with the CFTC and NFA and is a member of the NIBA.

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