Grain Market Chatter Closing Comments 01/22/2015

Craig’s Closing Grain Market Comments

January 22, 2015

Export sales tomorrow morning.

Corn:

Ethanol numbers were out this morning and they continue to be staggering.  Total bushels ground for ethanol this week was 102.8 million, considerably above the 99.3 needed to meet the USDA’s estimate.  Total stocks were at 20.4 million barrels, up 19.8% from this week last year, this is a negative to the corn market.  Another downside, ethanol margins in Iowa have now gone to a negative $0.40/bushel.

Corn in general remains locked sideways with a lack of any eventful news.  Lack of news brings out the thinker in many of these investors.  And right now ‘contagion’ is the word out there.  This is a fear that the continued decline in crude oil and a strengthening of the US Dollar will soon pass over to the corn market and send up plummeting. 

The one positive I saw out there today was that S. Korea is tendering for 125,000t of optional origin corn. They have been drawing from Black Sea supplies, but there is hope.

Technically, support of $3.74 continues to hold and we find new support building at $3.84.  Just like a broken record as of late, all three indicators remain bearish.  We are trading closer to the moving average and this may help to signal a light round of some technical buying.  First level of resistance is at $3.97.

Soybeans:

We have been pretty lucky the past few years in this bean market as the trade had been pretty hesitant to break prices with high demand and empty pipelines.  Now we are transitioning to a time of replenished bean supplies, not only in the US but in S. America also and the fear of the market is relaxing. 

Many bears in this market are thinking the seasonal February break in prices will pull us down to the harvest lows of $9.20, while the technical thinkers are actually looking at prices closer to $9.00 vs. the March contract.  The permanent bulls are really hoping for a bounce somewhere into the realm of $10.50.  I see this as a pretty lofty goal that may require some patience and the fireworks planting delays and weather scares.  With that in mind it is probably worth your time to keep an eye on the bean/corn ratio.  If that will pull back enough we may see bean acres moving to corn.

Technically, we are no better off today than yesterday.  All three indicators remain bearish with the stochastics continuing to dive into oversold territory.  $9.85 is a crucial level for this market right now.  We continue to teeter-totter across it through the trade day but fail to close above it.  At some point this market will break out of the sideways and the path of least resistance is lower.

Wheat:

Wheat caught a slight break on the overnight in thin volume with some weather headlines and then caved to technical pressure at the open of the day session.  Japan was report to have bought 142,000t of US/Canadian/Australian wheat today. That is supportive.  And, we have Putin over there in Russia riling things up again.  NATO confirmed the heavy Russian military equipment in the Ukraine has increased.  Reports are some 9,000 troops have been sent to back the separatist rebels.  Stay tuned and be prepared.  Should the Russian/Ukraine headlines get to buzzing again we should see opportunity.

Here’s that same old drum again, but we continue to show nothing but bearish in the technical indicators in this wheat markets whether we are looking at Minneapolis or Kansas City.  Support in the Minneapolis is at $5.40, which should prove to be substantial, while support in the Kansas City is at $5.57.  Both of these markets are acting like they may want to consolidate here.