Closing Comments
Lynn Miller
February 9th, 2016
Nothing to surprising came from the USDA report this morning. Carry outs were increased, pretty much as expected: Corn from 1.802 to 1.837. The only surprise really was a decrease in exports 50 million bushels, but they increased corn for ethanol 25 million. Beans from 440 to 450, and Wheat 941 to 966.
Corn:
What a wishy-washy session, bouncing either side of nearly unchanged when the USDA gave us nothing new to trade. World corn carryout remained stable. Small increases in Brazil and Argentina offset with a decrease in India (and increase in imports there).
The trade will now focus efforts on the upcoming AgForum. And we will start to decide what kind of weather pattern we will trade for the upcoming growing session. The majority tend to lean towards a 1998 pattern as El Nino exits (that was equivilant to 175 bu/ac) however, the risk is El Nino will exit in at 1983 pattern, in which yields were reduced to 78% of trend (or a 131.5 in today’s world).
Technically, all three indicators have turned bearish the March futures. The stochastics are very near to oversold territory but do not appear ready to issue a buy signal. The $3.62 support line gave way today and opened it up for a move back to the contract lows of $3.48. My next sales targets would be $3.70, 3.75 and $3.82.
Soybeans:
The only change in the bean balance sheet today was a 10 million bushel reduction in crush. Everything else static led to a static session with minimal gain. Nothing else for fresh news to trade today so focus here will also be Ag Forum and weather patterns.
Technically, all three indicators remain bearish the March futures. The Stochastics have crossed big time into oversold territory at 13.33, and are hooking – could we get a buy signal soon? Support continues to sit at $8.52. My selling targets would remain $8.80, $8.90, $9.00, $9.12 then $9.35 if you really want to reach.
Wheat:
Just as in Corn and Beans the market had very little reaction to the report today with no unexpected changes. With the focus moving to AgForum, we will probably see the USDA use a low price environment as reason to increase exports. Weather here will not be the same trend setter as in Corn and beans as the switch from El Nino to La Nina has relatively little effect on wheat production with the earlier season.
Technically, all three indicators are once again bearish the Minneapolis March. Just as in corn and beans, the stochastics has entered oversold territory at 6.99 with no buy signal issued yet. $4.82 held on for support today as the trading range remained quite small today. My price targets would be 5.00, $5.10, $5.20, $5.28 and $5.39.
