Early Market Talk

Markets yet to break out of low volume Holiday type trade. At 0600 CH19 off a ¼ cent with SH19 giving up $0.02 ½ after gains yesterday. Rumors of Chinese soybean business and less than ideal weather conditions in parts of south central Brazil lending support yesterday.

Dow futures at 22,989 off another 338 points this morning. Apple Inc (AAPL.O) setting the pace with its first sales warning in more than a decade. Apple is listed on all three major US stock indexes.

Crude a touch firmer at $45.61 but trade continues concerned with the potential of a slowing economy and ultimately demand. US $ slipping lower this morning.

Brazil exported 4.23 mmt of soybeans (153.3 mln bu) in December compared to 2.36 mmt (86.7 mln bu) a year ago.

USDA officials indicate they will decide by Friday (tomorrow) whether to delay key USDA reports scheduled for Friday January 11th which include production and yield data. Reports would be released later unlike the last shutdown in October of ’13 that to this day just show an asterisk.

Reminder the average rally in CH futures off the December low the previous 5 years has been 43 cents. With the December low at $3.72 ½ this past year that would make a $4.15 ½ target. Last year CH18 rallied 42 ¼ off the Dec low in no small part helped by Funds buying near 400K contracts. (net short 200 to long 200) Today we have them already long a net of near 100K.

Historical look at CH19 price with a stock use ratio near 11 still shows it undervalued. Beans the same perspective grossly overvalued. SF19 deliveries are current with 1,091 contracts redelivered overnight. Showing 4,931 open contracts as of this morning.

Brazilian weather taking on more importance …

Article Written by:

Bruce Nelson