Friday was a quiet day of trading in the grain sector that saw prices start higher early, but gradually fade to smaller gains throughout the day. Grain news remains restrained by the government shutdown and the forecast in southern Brazil continues to be hot and mostly dry.
Wheat leads firmer trade at midday.
Corn trade is 1 to 2 cents higher at midday with trade bouncing back from the Thursday selling so far. The South American recent weather pattern remains intact with a mix of excessive rain and pockets of dryness with some potential second week improvement.
Ethanol profitability remains an issue with blender margins improved with the recent energy rally while producer margins remain mired near the lows with ethanol futures slightly firmer today, but still only 2 cents off the recent lows.
The government partial shutdown is expected to continue to limit news. Trade talks with China has raised the specter of potential fresh corn exports with good progress reported to have been made with a pause in negotiations for now with Chinese delegations expected in DC next. CONAB raised production slightly for Brazil to 92.1 million metric tons.
On the March chart support is at the $3.77 1/2 100-day with the lower Bollinger band at $3.72 below that, and the 10-, 20-, and 50-day moving averages clustered around $3.80 as resistance.
Soybean trade is 3 to 5 cents higher with trade coming back from the heavy selling yesterday with little fresh news. Meal is $1.00 to $2.00 lower and oil is 10 to 20 points higher.
South America weather items remain in the recent weather pattern with harvest going early amid heat and pockets of dryness in Brazil with generally disappointing yields so far, and excessive rain potential in Argentina with potential improvement in the extended forecast.
The few weather problems should mean slightly lower production, with global stocks remaining ample with the official China import target down about 10 million metric tons from last year. CONAB reduced Brazil soy estimates 1.1% to 120.1 million metric tons, which is higher than most private forecasts at the moment. Forecasts are being monitored closely.
March chart support is at the 50-day at $9.04 with resistance at the $9.29 200-day then the upper Bollinger Band at $9.36.
Wheat trade is 5 to 8 cents higher with trade reversing the losses seen yesterday with rising world wheat cash values. The dollar has hit three-month lows which should add support with more sideways trade building now.
Southern Hemisphere harvest will continue in the near term. North American winter wheat should have some warmer weather than normal, which in January we usually do not view as a good thing with late emerging wheat especially vulnerable. Russia has continued to export aggressively with domestic prices rising, with Wednesday’s sales to Egypt getting close to exhausting bushels in export position.
On the March Kansas City chart, support is the 10-day at $5.00, then the $4.87 1/2 lower Bollinger Band. Resistance is at the 50-day at $5.05 3/4 then the upper Bollinger Band at $5.23.