Grain Notes 1/30/23 AM Comments

(Phil Knuth)

Good Morning.  Corn and soybean futures were higher overnight.  March corn was up a half of a penny, settling at 6.8350.  March soybeans were up 17 ½ cents, settling at 15.27.  In the outside markets, as of 7:50am:  The US Dollar Index is off 64 points, trading at 101.863.  March crude oil is off $1.09, trading at $78.59 per barrel.  Precious metals are mixed.  Industrial metals are all lower.  The Electronic Mini-DJIA is off 183 points, trading at 33,863.  Soybean futures were clearly the upside leader overnight, driven by sharply higher soybean meal futures that are reapproaching contract highs.  This is quite a turnaround from sharply lower soybean futures on Friday!  From a fundamental perspective, there is not a whole lot of hard data out there that is supportive to the recovery of soybean futures, however, the Chinese return from the Lunar New Year Holiday this week, so this morning’s rally could be supported by the expectation of an uptick in Chinese buying now that the holiday is over.  South American weather continues to be scrutinized closely by traders.  For the last two weeks or so, the situation in Argentina has improved considerably.  Weekend rainfall in Argentina exceeded what had been forecasted and the week ahead calls for more showers through Thursday.  Although the long-term Argentine forecast remains dry, the rainfall that Argentina has received and should continue to receive this week has traders reassessing Argentine crop production potential.  With the Brazilian harvest now underway, more attention is being paid to Northern South American weather.  For the next couple of weeks, weather looks conducive to harvest activity in Mato Grosso.  Timely harvest activity in Mato Grosso is key to getting the Safrinha corn crop planted within the correct window, so any harvest delays there could have considerable impact on second-crop corn production.  On Friday, the funds were net even on corn, sold 5000 contracts of soybeans, and sold 2000 contracts of wheat.  They are now estimated to be net long 204,500 contracts of corn, net long 152,640 contracts of soybeans, and net short 65,800 contracts of wheat.  From a chart perspective, March corn faces initial resistance at the overnight high, 6.8725, followed closely by 6.8875, the 2 ½ month high charted on January 18th, and then the psychological 7.00 mark.  Initial support lies at 6.8250, the overnight low, followed by the 6.75 area, and then 6.6125, last week’s low charted on Monday.  March soybeans face initial resistance at 15.3250, the overnight high, followed by the seven-month high charted on January 18th, 15.4850.  Initial support lies at 15.1625, the overnight low, followed by the psychological 15.00 level, and then the 14.80 area.  Opening calls are higher.
Have a great Monday.