Soybeans rose Tuesday after only minor changes in the USDA WASDE report and despite word U.S.-China trade negotiators might again extend the deadline for new tariffs. The later a new deal is finalized, the less the U.S. benefits, as we get closer to new-crop South American harvest. Wheat and corn overcame early pressure to finish higher on the heels of slightly bullish WASDE changes in wheat.
Midday: Soybeans lead quiet pre-report trade.
Corn trade is narrowly mixed with quiet trade at the lower end of the range continuing ahead of the report this a.m. On the report, production is expected to be unchanged from last month, with the domestic carryout at 1.919 billion up just slightly from last month. Ethanol margins have remained steady with corn and ethanol futures sideways, and unleaded at the upper end of the range overall boosting blender margins.
Basis has held up well with some strength showing up at processors again. The last weekly report showed harvest at 92% complete vs. 100% on average. On the March contract, support is the lower Bollinger Band at $3.73 which we have held just above, with resistance the 20-day at $3.79.
Soybeans trade is 2 to 4 cents higher at midday, hanging right at $9.00 with trade trying to consolidate gains ahead of the report with reports of a delay in further tariffs with China. Meal is flat to $1.00 higher and oil is 5 to 15 points higher. The real remains cheap vs. the dollar with Brazilian weather still in good shape, with Argentina more mixed short term and coming off a dry week.
Bean basis has moved to a more sideways trend short term with the futures rally likely to soften basis in some areas this week. On the WASDE report production is expected to be unchanged, with domestic carryout at 476 million bushels, inline with last month.
January chart support is the lower Bollinger band at $8.65 which we are finally pulling away from, with trade just above the 20-day at $8.96, with the upper Bollinger Band at 9.27.
Wheat trade is narrowly mixed at midday with trade seeing choppy action so far. The Chicago/KC March spread is back to 97 cents near the highs. Chicago also holding a 97 cent premium to Minneapolis which has narrowed to start the week. The dollar remains rangebound.
Export business remains quiet with Russian values rising again and some midweek tenders. The forecast dries the Plains out short term, with little change to world conditions north and south this week. The WASDE report is expected to show carryout at 1.01 billion, down just slightly from last month.
The March KC chart support is the lower Bollinger Band at $4.23, and resistance the 20-day at 4.33.