MarketEdge AM Comments

Jan 29, 2024

(Phil Knuth)

Good Morning.  Corn and soybean futures were lower overnight.  March corn finished the overnight session off 3 ¼ cents, settling at 4.43.  March soybeans were off 7 ¼ cents, settling at 12.02.  In the outside markets, as of 7:45am:  The US Dollar Index is up 230 points, trading at 103.664.  March crude oil is off 49 cents, trading at $77.52 per barrel.  Precious metals are higher, except platinum.  Industrial metals are higher, except zinc.  The Electronic Mini-DJIA is off 18 points, trading at 38,240.  Grains and oilseeds were under pressure overnight, weighed down by speculative liquidation and profit-taking.  The behavior of futures for the last few sessions can mostly be chalked up to money-flow, however, there are a couple of news items this morning that are feeding the bearish momentum.  China’s largest property developer, Evergrande, has reached the point of no return and has been forced into bankruptcy liquidation.  Evergrande’s issues are not a new story, however, the development that they have been ordered to liquidate raises traders’ concerns about the overall health of the Chinese economy.  GDP growth has slowed considerably from what it was in the last several decades and news of the failure of this behemoth property developer only amplifies the “what if?” scenario regarding future commodity demand as China’s economy retracts.  Early last week, South American weather concerns helped to prop up soybean futures.  As of this morning, high temperatures that had been forecasted for later this week in Argentina have been removed from the forecast and better chances of rainfall for key growing regions increase in the extended weather models.  Meanwhile, the Brazilian soybean harvest continues to chug along with new bushels available to the global marketplace at extreme discounts to US supplies.  Brazil’s soybean harvest is reported to be 11% complete.  This figure is six points ahead of this time last year.  Brazilian values are at $1.80 to $2.00 discount to the US.  On Friday, the funds sold 2000 contracts of corn, sold 6000 contracts of soybeans, and sold 5000 contracts of wheat.  They are now estimated to be net short 276,470 contracts of corn, net short 108,390 contracts of soybeans, and net short 69,345 contracts of wheat.  From a chart perspective, March corn finds initial support at the one-plus week low charted overnight, 4.4125, followed by the contract low charted on January 18th, 4.3675.  Initial resistance is at 4.4750, the overnight high, followed by 4.50, and then the two-week high charted on Thursday, 4.5325.  March soybeans find initial support at the psychological 12.00 mark, followed immediately by the new 7 ½ month low charted overnight, 11.98, and then the June 8th low, 11.7525.  Initial resistance is at 12.1250, the overnight high, followed by the two-week high charted on Thursday, 12.4750, and then 12.50.  Opening calls are lower.
Have a great Monday.

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