Grain Market Chatter Closing Comments 02/04/2015

Craig’s Closing Grain Market Comments

February 04, 2015

I feel like we are living a market style Karate kid training session.  Risk On.. Risk Off.

So, I’ve been doing a little studying, trying to figure out just what in the heck happened to us yesterday.  It appears the consensus is the HFT (High Frequency Trading) machines that the securities use, to trade in and out of positions, were searching for buy stops above the market. These transactions are done in mere seconds seeking sometimes only a ¼ cent in profit.  Anyway, the market feels these ‘machines’ were the reason for our unprecedented rally.  We saw no new demand news and no new supply news to cause that type of a reaction. 

All in all yesterday’s rally wasn’t really a good deal for us, that is unless you got grain sold, as it pushed US corn price over the Black Sea offering, Bean and meal prices over Brazil and wheat prices over France.  So we’ll close the door on yesterday and look forward to tomorrow’s export sales numbers.  Estimates are:

                        Corn                          800 – 950 mt

                        Beans                        450 - 650 mt

                        Wheat                        300 - 450 mt

Corn:

The dollar was back up today and crude oil back down which had a tendancy to pull corn down and limit farmer selling after yesterday’s rally.  Even after yesterday, cash prices remain below levels the producer wants to sell at and we still have A LOT of 2014 corn to sell out there.  Weekly ethanol production came in it 99.5 million bushels, the lowest level in 10 weeks.  Ethanol stocks continue to build and we are facing shaking to negative margins.  It appears fundamentally the bears are in control and the deck stacked against us.  Please help yourself make good sales, make a plan and stick to it. 

Technically, two of three indicators are bullish old crop corn with the MACD near a signal.   The price action of the yesterday gave the stochastics a sky-rocket into comfortable territory and today’s market is showing to have put some stress on.  If we can muster some support for gains tomorrow look for $3.95 to offer resistance.  We closed at a pretty important level of $3.83 ½.  This is the support/resistance line and we need to muster a little strength here.  If I still needed to price some old crop bushels I would be looking at $3.95 and then $4.17.

Soybeans:

Canadian canola stocks were out today at 11.1 mmt vs 10.7 expected and 12.4 last year.  As crude prices backed off and the dollar gained the market did a good job of trying to take out yesterday’s gains.  The South American producer was a good seller yesterday and again today w/ the currency ratios to their benefit.  We are still watching and maybe waiting for export demand to make the shift to S. America.  I am trying to find a reason for this market to sustain some sort of rally, but finding it difficult without something like a weather event and this is not the time of year for weather to help us out.

Technically, two of three indicators remain bullish old crop beans. Just as in corn, however, today’s losses are weighing heavy on the stochastics and the MACD has yet to signal a buy.  First level of resistance sits at $9.87 with $10.08 and $10.28 above that.

Wheat:

Try as I may, I just can’t find a good story in wheat.  Russian export duties went into effect on February 1^st, which could have been supportive with delays; however it appears any gaps here will probably filled by the EU.  Strength of the US dollar has our exports struggling.  There are whispers of productions concerns in the US and the Black Sea; however, it is way too early in the game for the market to dive in when everyone knows wheat has nine lives. 

Stats Canada numbers were out today at 24.82 Million tonnes vs. a trade guess of 25 and 28.68 one year ago showing overall production was down.  This could be viewed as supportive.

Technically, two of three indicators are currently bullish with today’s close just barely over the 10-day moving average.  If today’s action didn’t put the MACD in reverse we might see this come together as well.  A good buy signal would push up and maybe give us some hope at a resistance level of $5.95.  However, we really need to get enough steam in this market to get over that 100-day moving average to give a move some substance.