Unconfirmed reports in the media that the U.S. and China are getting closer to an actual agreement in writing helped grains and oilseeds trade higher Thursday. Early Friday, USDA will release new-crop estimates and six weeks of missing export sales data.
Midday: Broad gains at midday, albeit slightly off the overnight highs.
Corn trade is 5 to 6 cents higher at midday with trade optimism, but the USDA acres number limited gains after some short covering added support toward the end of the night session. A 92-million-acre figure, up 3.35% year over year, as the USDA Outlook estimate for 2019 U.S. Acreage.
The second crop in Brazil is being planted in good condition for now with planting heading past the halfway point with early rains looking to be good for germination with some short-term dryness in Argentina. The energy complex remains near the upper end of the range, with weekly ethanol production dipping just below 1 million barrels per day with stocks 447,000 barrels lower.
Corn basis should firm again with more weather disruptions with aggressive bids by some end users but the higher board may stop the basis improvement if we hold our overnight gains. Ethanol is a positive, up a penny and a half at midday.
On the March chart trade has support at the recent $3.68 1/2 low, the lower Bollinger Band at $3.70 7/8, with more notable chart resistance clustered at $3.76-$3.78 which we have been testing this morning.
Soybean trade is 5 to 7 cents higher with trade optimism and a lower U.S. acreage number that market bears argue is already priced-in. Meal is flat to $1.00 higher and oil is 40 to 50 points higher. The USDA Outlook forum noted a 85 million acre number for 2019 planted acreage, down 4.7% from 2018.
South America weather should maintain the recent pattern in the coming days with Brazil harvest moving along and drier weather in Argentina with pod fill on going. Crush margins remain strong.
Trade talks will continue in the US this week with some progress scored this week according to most sources and the March 1 deadline looming, although there is more talk of an extension with apparent good progress this week along with further Chinese purchase commitments over a broad array of ag products.
Export sales are delayed until Friday with the shortened holiday week, when we expect to be provided 6 weeks’ worth at once.
On the March chart resistance is now the moving averages clustered at $9.09-9.14 which we just below, with support at the lows from yesterday at $8.93 with oversold conditions in place.
Wheat trade is 6 to 8 cents higher at midday with good short covering developing overnight, but trade will need to hold gains during the day session with trade 3-4 cents off the highs. U.S. export business will remain in focus after the U.S. didn’t offer on the Egyptian tender yesterday.
Iraq has barred Russia over gluten content from their upcoming tender. The dollar has remained flat after Fed guidance. Cold weather is expected to keep some stress on the plains in the near term with winter wanting to hang around.
On the March Kansas City chart support is low at $4.49 1/4 with resistance the 10-day at $4.80.