Grain Market Chatter Closing Comments 01/26/2015

Craig’s Closing Grain Market Comments

January 26, 2015

Corn:

Fundamentally there is very little new news on the horizon.  There is still a lot of corn in the US that needs to be sold and with corn prices hardly sustaining producer selling has backed off.  The Bulls have been pretty gunho with the ethanol production numbers being so large, but you can quickly bat that away as we watch margins plummet into negative territiory.  On the Supply side, we have Ukraine corn coming on line and a larger than expected corn crop in S. America. 

Weekly export inspections (actual loadings) were supportive today.  The trade was looking for a number between 600 and 750 thousand tons.  Actual loadings were much higher at 887 thousand tons.

The all controlling funds are currently long approximately 230 thousand contracts, of which I believe will continue to be reduced.  The key will be how they view the new crop scenario.  As of now if feels an acreage number of 88 million is the tipping point.   Any larger planted acres will be seen as bearish while a number below 87 million could be viewed as bullish.

Technically the corn market has been in a pretty stagnet bearish mode.  All three indicators remain bearish as of the close this afternoon as well; however, we are inching towards some sort of technical commotion I believe.  The daily range is getting narrower and narrower as we approach the 10-day moving average. $3.74 has held so far as support for us, so if we manage to get a bounce in the next few days look for $3.96 and $4.17 respectfully.

Soybeans:

While export sales last week were pitiful, but the loadings continue to be strong for now with 1,522 metric tons reported, nearly identical to last week.  I believe this was probably what the trade grabbed as supportive today that launched us into positive territory for the day.

Overall, however, it appears the trade in general is coming to terms with the fact we are entering a new era were global stocks are no longer shrinking.  In fact, total supply has jumped +/- 30% this year while demand has only grown by 5%.  The majority of the increased demand is China.  The question is will China be able to sustain this growth or will their need stabilize with a decrease in pork and poultry production.

Technically 2 of 3 indicators remain bearish; however, we did see the stochastics signal a buy at the close today.  The MACD has made a nice turn upward and we saw the trade close to the session high of $9.91.  If we can manage to turn this thing around for a bit we will have established a new support level at the $9.68 mark, and any support above $9.22 is welcome in my book.  Assuming we can muster a technical rebound be looking for $10.05 and $10.25.

Wheat:

The headline to hit the market today just before close from the Wall Street Journal: S&P Downgrades Russia Foreign Currency Rating to Junk Wall Street Journal‎ - 4 hours ago.  Not exactly what the wheat hopefuls wanted to see as Russian wheat just got cheaper.

Fundamentally, we didn’t see any reaction from news of rebel forces shelling the port city of Mariupol, Ukraine today.  Thoughts are US carryout could go to 815 in the 2015/16 marekting year as world demand slows and other world exports pickup the slack where expensive US wheat appears to be off limits as the dollar finds more strength.

Technically, wheats just can’t seem to catch a break.  All three indicators remain bearish with the stochastics buried pretty deep in oversold territory.  The Minneapolis traded an outside day lower today which is pulling us farther away from the moving average and giving the bears more ammunition.  Support in the Minneapolis remains in the area of $5.40, which should prove to be substantial, while support in the Kansas City is at $5.57.