Closing Comments
Lynn Miller
January 28th, 2016
Corn:
China, China, China. They seem to be the only news makers in corn today, and none of it was good. Actually, the market tends to take all news from China with a bearish tone. First off they announced a purchase of 1.2 mmt of Corn from Ukrain for Jan/Feb/Mar delivery undercutting US business. Then, they announced a potential 20% reduction in the reserve corn price bringing it down from $8.30 to $6.15/bu. This price is edging closer to competing with imported grains, at least within $0.50.
Funds were credited with selling 7,000 contracts today.
Exports tomorrow expected between 800-1,000mt.
Technically, today was crushing. Two of three indicators are now bearish the March futures. We closed below the moving average and the stochastics have issued a sell signal. Support also gave way today and has opened the door for a move downward to $3.64. Since gapping higher on January 19th we trying to establish a new trading range between $3.64 and $3.72. My next sales targets are now the top of the range at $3.72 and above that we would shoot for $3.80, $3.95 and $4.10 if we can find momentum.
Soybeans:
The bean market heard the word cancellation today and absolutely retreated. Before the session opened, the USDA announced a 395 tmt cancellation for China. What they failed to tell you was that this cancellation was from a ‘Frame’ contract. You know, the unhedged unofficial Chinese commitment they make every year. The sales/cancellations are required to be reported; however, they are not considered sales until the details are locked in. This cancellation may just have been a reason for the shorts to add to their position. Which they did selling 11,000+ contracts today.
The trade is looking for a small book tomorrow of 500-800tmt. But, the lineups in S. America and a firming PNW basis would imply US sales greater the 1mmt. This means export numbers could be a market mover tomorrow.
Technically, two of three indicators are now bearish the March futures with the MACD not far behind. We closed way off the 10-day moving average and the stochastics are in sell mode; however, they plateaued at the end of trade. Nearby support has moved downward to $8.67. My selling targets are $8.75, $8.82, $8.90, $9.00 then $9.12 if you really want to reach.
Wheat:
By the look of the market, Oprah forgot to tweet any good news about wheat today.
I guess I’m not as negative as most, I thought with beans down $0.14 and corn down $0.04, wheat did a good job holding on at only down 1. There were a lot of things weighing on the market today. Arrgentina reported selling wheat into South Korea and Vietnam today for the first time in 10 years. Weaker currencies and freed export barriers are allowing US offers to be undercut.
There is talk US Spring Wheat plantings will be down next year since there is no money to be made. Producers are contemplating switching acres to corn where forecasted good weather could very well bring yields that will result in profit.
Export sales tomorrow expected between 250-400 tmt.
Technically, two of three indicators remain bearish the Minneapolis March futures. We closed just below the moving average and the stochastics are in sell mode. Support moved downward today with no real trading range, now back at $4.82. My price targets have not changed and remain $5.00, 5.05, $5.10, $5.20, $5.28 and $5.39.
