Grain Notes 1/16/19 AM Comments 

Good Morning.  Corn and soybean futures bounced higher overnight following yesterday’s sharply lower session.  March corn finished the overnight session up 2 ¼ cents, settling at 3.7350.  March soybeans were up 5 ¼ cents, settling at 8.9850.  In the outside markets, as of 8:00am:  The US Dollar Index is up 0.074, trading at 96.113.  February crude oil is off 44 cents, trading at $51.67 per barrel.  Precious metals are higher, except for silver.  Industrial metals are higher, except for zinc.  The Electronic Mini-DJIA is up 101 points, trading at 24,085. 

  • There was no singular big news item that caused yesterday’s sharp sell-off.  Traders were more or less venting frustration over a perceived lack of progress in US/Chinese trade negotiations.  Also, Chinese import data released on Monday that showed slowing overall soybean demand, due in large part to the African Swine Flu epidemic, added more pressure to futures.  Since the meeting between Trump and Xi in Buenos Aires on December 1st, the trade has followed daily tidbits of feel-good stories of progress between China and the US in regards to trade.  Although the Chinese did purchase some US soybeans in an act of good faith, a formal agreement putting the whole situation to bed has yet to be finalized.  In particular, a lack of real, quantifiable progress from last week’s well-advertised meeting between the two sides in Beijing has been extremely frustrating to grain and oilseed traders.  Basically, yesterday was Chicago’s way of saying, “Enough talk already, give us some results!” 
  • Another global affairs news item that has impacted trade, in general, is yesterday’s failed Brexit vote in Britain.  The rejection of this measure by Parliament was responded to by a sharp drop in the value of the Euro and a corresponding rally in the US Dollar.  A higher US Dollar adds pressure to raw commodities, in general. 
  • In Washington, Congress and the President are, once again, no closer to an agreement to restore funding to the federal government today than they were yesterday.  It is now day 26 of the longest government shutdown in US history.  Traders are really missing key data from USDA that they typically use to prove or disprove trade rumors and set the course for the futures markets. 
  • Yesterday, the funds sold 15,000 contracts of corn, sold 8000 contracts of soybeans, and sold 3000 contracts of wheat.  They are now estimated to be net long 105,500 contracts of corn, net short 11,800 contracts of soybeans, and net short 8600 contracts of wheat. 
  • From a chart perspective, both corn and soybean futures took out key support levels yesterday.  March corn took out initial support, at 3.75, and traded within a penny of testing the next psychological support level, 3.70, which now stands as initial support, followed by low charted on November 26th, 3.6725.  March soybeans plunged through the key, psychological 9.00 mark yesterday that has held as underlying support since January 3rd.  The March contract went on to trade as low as 8.9250.  Further support lies at 8.8050, the low charted on December 27th.  Opening calls are higher.

Have a great Wednesday.