Morning Grain Comments Friday February 16th, 2018
Reminder: The grain and oilseed markets will be closed on Monday due to President’s Day.
After today’s close, the next trade will be Monday night at 7 PM Chicago time.
Corn: Corn traded both sides in a very narrow range overnight. CH8 has support at $3.67 ¼
and $3.66 with resistance at $3.69 and $3.70 ½. At 8 AM, the USDA announced the sale of
116K tons of 17/18 corn to Japan and 28K tons of 17/18 soybean oil to South Korea. The
Chicago Fed said that farmland values in its region (IA, IL, IN, WI, MI) were up 1% in 2017,
the first increase in four years. They also said repayment on non-real-estate loans were lower
in Q4 and that loan renewals and extensions were higher, however. The US created 1.283 bln
D6 (ethanol) biofuels credits in January, comparable to the 1.278 bln in Dec. Only 231 million
D4 (biodiesel) credits were created, however, vs. 364 million in December. High level officials
in both Mexico and the US have expressed optimism over the ongoing NAFTA negotiations in
recent days; the next round of talks are scheduled for Feb 25-Mar 5. Jordan issued a new
100K tons feed barley tender after failing to buy any in a tender earlier this week.
Soybeans: Soybeans also traded both sides; the overnight range was less than 4 cents for
the SH8 contract. They are up 1-2 at the break. The daily pivot point for SH8 is $10.21 ½ with
1st resistance at $10.27 ½ and 2nd resistance at $10.30 ¾. The funds are long an estimated
105K contracts of soybean meal as of last night’s close, near the largest net long ever
reported by the CFTC. Rains are forecast to begin falling in SW Argentina later today. Over
the next 7 days, rain in their growing areas will range from 0.2” to local amounts of as much
as 2”. The heaviest amounts are not forecast to fall in enough places to dramatically change
drought conditions. The Buenos Aires Grain Exchange is still estimating the Argentine soybean
and corn crop at 50 mmt and 39 mmt but also said that 56% of the soy and 58% of the corn
has been damaged by the drought that began in November. Other private estimates are more
pessimistic. Brazil will have another 1-2 days of favorable harvest weather before rains move
in and slow efforts again. Brazil’s ag minister said he thinks there will “be a repeat of last
season’s super crop”; Brazil saw record soybean and corn production last year. There continue
to be concerns over a slower-than normal soy harvest reducing the area for second-season
corn. Malaysian palm oil was mildly higher overnight; the Chinese markets remain closed for
Wheat: All three wheat markets come into the breakdown 2-3 cents. HRW has gained notably
on SRW in recent days. Iraq bought 50K each of Australian wheat and Canadian wheat and
US wheat in their latest government tender. Pakistan sold another 200K tons of wheat for
export. They have been aggressive in recent weeks.
Stock markets are trading slightly lower as they go for their 6th straight higher close. The
dollar is up due to some dovish comments by a European Central Bank member and Japan
reappointing their central bank chair Haruhiko Kuroda to another term. Japan also nominated
an advocate of an easy monetary policy to one of other the governor posts which was seen as
a signal they will continue their very dovish monetary policies. Non-grain commodities are
mixed with petro products slightly higher but nat gas and the softs slightly lower.