DTN Grain Close: Soybeans Plummet Despite New China Buying

The Port of Rosedale - Rosedale, Mississippi - Mississippi River ©Debra L Ferguson Stock Photography

Following six consecutive higher closes and a USDA WASDE report which offered little change to the soybean supply and demand table, soybeans plunged on heavy fund selling Wednesday. This comes despite confirmation that China had bought another 21.4 million bushels (mb) of U.S. soybeans with another sale of 5 mb sold to unknown, which may also be China. Corn fell hard as well on new fund selling, pressuring wheat.

 

Midday: Broadly weaker trade at midday with corn leading us lower.

CORN

Corn trade is 5 to 6 cents lower with trade scoring new lows for the move with selling picking up during the day session on seasonal selling and demand concerns.

On the WASDE report, domestic carryout was unchanged at 1.91 billion, with South American production unchanged, and world stocks at 300.6 million metric tons up from 296 last month, but well below last year at 320.6 million. The weekly ethanol report showed production up again, 12,000 barrels per day, while stocks jumped sharply up, 1.176 million barrels.

Basis has held up well with some strength showing up at processors again. On the March contract support is the lower Bollinger Band at $3.73 which we are just below at midday, with resistance the 20-day at $3.79.

SOYBEANS

Soybeans trade is 5 to 7 cents lower with trade strength evaporating as corn turned lower, and buy the rumor sell the fact action with 585,000 metric tons of sales to China confirmed. Meal is $2.00 to $3.00 lower and oil is 10 to 20 points lower. The real remains cheap vs. the dollar with Brazilian weather still in good shape, with Argentina more mixed short term.

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, domestic carryout was unchanged at 475 million metric tons, Brazil and Argentina production unchanged, and world stocks at 96.4 million metric tons, up 1.0 million metric tons 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 $8.95, with the upper Bollinger Band at 9.25.

WHEAT

Wheat trade is 1 to 7 cents lower with trade pulling back from the gains seen post report as the carryout declined slightly with Kansas City trade holding up the best.

The Chicago/Kansas City March spread is back to 88 cents narrowing from the high with Kansas City gaining sharply the last two days. Chicago also holding a 11 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 has some moisture for Kansas.

The WASDE report showed the carryout down 40 million bushels to 974 million with world stocks at 289.5 million metric tons, up 1.2 million from last month. The March Kansas City chart support is the lower Bollinger Band at $4.22, and resistance the 20-day at 4.34.

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