Early Market Talk January 23, 2020


Markets continue to drift (with the wheat exception) in rangebound trade searching for a story. Corn inside a 21¢ range since early November and flirting with the high side. Soybeans have seen a series of rallies and breaks since May with the largest rally being $1.20 ½ in May and $0.87 ¾ break in October. Beans currently working a $0.52 break. The previous two breaks were $0.82 ½ and $0.87 ¾.

At 0600 CH20 trading a scratch higher at $3.89 ½ with SH20 off 4¢ at $9.09 ¾. Chi wheat 3¢ higher at $5.81. Volume typical for a night session.

Dow futures off 33 pts at 29,105, crude 92¢ lower at $55.82 and the US $ unchanged.

Private consulting group in Brazil estimating soybean production there at 124.3 mmt. USDA currently at 123 mmt. Trade more willing to accept that Brazil soybean production for 19/20 will end some shade of 123 mmt with benign weather to finish the crop. Early harvest reports of yields 10 – 15% better than a year ago. Whole lotta harvest ahead so too early to call this a clear trend.

Widow for US soybean export competitiveness closing with April FOB values out of Brazil $15.00 / tonne under US. Need to see roughly 200 mln more beans sold to China in the next few months if we have any chance to meet current USDA export estimate of 1,775 mln bu.

Palm oil losing ground overnight and continues to look problematic on the daily chart. Palm oil has been largely been the driver behind US soybean oil strength.

CHCK trading near 5¢ giving long positions that are not going to be priced against CH20 a decent opportunity to get forward. See this spread as rangebound into first notice day which is a month away.

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