Demand drives corn, trade moves soybeans and wheat slides

Grain & Oilseeds Report

Corn: To start the week, corn made a slow push to the resistance area for March. Overnight sales showed 119,888 tonnes sold to “unknown” Sunday, which added a small amount of support Monday. That sale combined with some open chart room to the upside allowed for a high of 432 3/4. That high is close to the 435 1/2 key resistance area but not quite to the true level that matters just yet. There were two rounds of buying seen Monday, each one running into solid resistance at 431 and 432. Each whole penny higher seems to have many resting orders ready to be sellers close to the key resistance level.

Exports still remain strong for this market and while cancellations have not been seen for some time now, the fears of future cancellations help to keep resistance in for this market. It is possible that if enough time goes by without cancellations trade will slowly back away from selling at resistance levels allowing for 435 1/4 to be broken. Right now, however, there are not large enough sales to give the buyers reason to break key chart resistance levels.

Bulls are looking for either a line up of daily sales or one big overnight sale to take out chart resistance. Bears are selling near resistance right now and if 435 1/4 is taken out there is still 440 3/4 resistance to sell from as well. Currently the trend is still sideways and in that trend, current levels are a sale…Ryan Ettner  

Soybeans: Another choppy session was seen Monday as neither bulls nor bears were able to gain much traction. Cold weather across the Midwest is keeping beans from being shipped and was also slowing down production capacity at plants. There were also reports that NG usage was being restricted due to heavy demand. This kept the bull spreads popular with the trade.

Weekly inspections came in strong Monday as the United States shipped out 73.8 million bushel of beans last week. We have now shipped out 1.115 billion bushels of beans as of Jan. 23. The USDA anticipates that the U.S. will sell 1.495 bushels for the whole year. There continues to be talk that some of the unshipped sales will be canceled, but at this time we have not seen any big export cancellations. We will have to see confirmation of the much talked about cancellations soon for the government will have to raise their export sales estimate in their February report. The USDA did announce the sale of 183,000 tonnes of new crop beans to unknown destination Monday.

South American weather continues to be viewed negative by the trade. Aside from follow-up rains in Northern Argentina on Friday, of 0.10 to 0.50 inch, the weekend was quiet. Brazil saw regular rains of under 0.50 inch during this time. Argentina is seen receiving regular rains all week. Brazil will remain well supplied with moisture in the South and slightly drier than normal weather in the North this week. Temperatures will run normal this week.

Shipping firm, SA Commodities, estimates there are 650,000 tonnes of soybeans set for January shipment. A record February amount, of 2.5 million, is currently scheduled. That would be a record for any previous February. To help move the coming tsunami of exports from the country, there are already 39 ships waiting for loading at the number two port of Paranagua. Brazil’s harvest is estimated to have reached the 3% level with yields being reported as good. Argentine producers continue to hold soybeans, as a hedge against the sharp devaluation of the Argentine peso and limits on the conversion to the dollar. Farmers are said to be holding 8.4 million tonnes of soybeans vs. 1.6 last year at this time last year. Monday morning, the government announced limits of $2,000 in US dollar conversions. We do not feel this will encourage the producer to get aggressive in moving their beans.

Allendale still anticipates that beans will work their way to the $12.50 or lower level as we move into spring as the world shifts demand to South American supplies. With this in mind we encourage producers to get product hedged on bounces…Jim McCormick

Wheat: Wheat finished lower and continues to flirt with contract lows as we fail to find much buying. While this crop sits in dormancy, it will not provide much in the way of new news until we move closer to spring. The trend continues to be down and though we have held recent lows, we wouldn’t expect to see anything in the way of a sizable rally.

Overnight a Saudi Arabia wheat purchase helped give wheat some positive information but a lower close continues to create more questions about whether this commodity will see a bounce or any short covering any time soon. Continue to hold shorts as a break into new lows continues to need to be sold.

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. www.allendale-inc.com

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