Grain Market Chatter Closing Comments 02/02/2015

Craig’s Closing Grain Market Comments

February 02, 2015

The crop insurance pricing period starts today and runs through the end of the month.   It will be interesting to see if this has any impact on prices during the month of February.   If I was a betting man I would probably bet that we will see December corn outperform November beans during the month.

Corn:

Energy prices were higher while the dollar was lower for most of the session and this helped support corn during the session.  Corn was also assisted by the weekly export sales report which pegged weekly sales at roughly 26 million bushels. 

While the above factors were supportive we also were dealing with fears in the trade that demand is starting to slacken worldwide helped pressure the market.  We only ended up down $0.00 ¼ for the session in the nearby futures while December futures were up a like amount.  I look for this market to have support at $3.64 with resistance at the 100 day moving average of $3.78.

Technically speaking all three of my technical indicators remain bearish.  Our old buddy Fibonacci would tell us that we should see some support in the March futures at $3.64 level.  If that fails to materialize I fear we could test the life of contract lows at $3.30 ½.

Soybean:

Brazil is probably the key to the bean market and as we gaze to the south we see that bean harvest is estimated at 5% complete versus 3% last week and 5% on average.  It is interesting to note that the Brazilian farmer is estimated to have sold only 33% of this record crop versus 49% sold at this time last year.  Their reluctance to sell was seen as supportive to prices today.  The weather in South American is still looking pretty good.  There is some rain heading into Mato Grosso which could produce harvest delays, but it doesn’t seem to be enough to get excited about.  I heard this afternoon that Oil World’s range of Brazilian bean production is 89 to 93 MMT.  Anyway you cut it we are looking at the largest production in the history of the nation and that should keep pressure on prices.

Here in the USA we had another good week of export inspections.  We checked in at 62.4 million bushels, up from the 44 million posted a year ago.  Year to date we have export inspections sitting at 77.7% of the total projected annual exports.  Last year at this point we were at 70.3% of the eventual annual export number.  Does this mean that exports will end up being larger than what is currently projected?

All three of my technical indicators are bearish at the current time and as the bean harvest in South America progresses I would expect the market to challenge the life of contract lows. 

Wheat:

Wheat is kind of interesting in much the same way that the Elephant Man was interesting.  If you look at what has gone on in this market you see that we have either made new life of contract lows or we are on the cusp of establishing new life of contract lows.  We have a weather situation in which we have cold weather and some pockets of dryness in the Great Plains.  I am also hearing conjecture that the USDA will reduce the monthly crop ratings for wheat.  All of that would seem to be supportive and yet in spite the precipitous decline in prices the price of wheat around the rest of the world seems to have dropped as sharply if not more sharply leaving us uncompetitive in the export market. 

Weekly export inspections came in at a weak 14 million bushels.  At this point in time total export inspections for the year are running 255 million bushels behind where they were at this point last year.  The USDA is projecting that we will end the year with 251 million less exports than a year ago so we are either going to need to pick up the pace or prove the USDA wrong.

All three of my technical indicators are currently bearish both the Minneapolis and Kansas City March futures.