Grains and oilseeds are mixed on Wednesday following the overnight session. The U.S. dollar traded higher overnight to recover some recent losses. Crude oil rebounded from yesterday’s lows after hitting the lowest level in over eight months. Stock futures also recovered slightly from yesterday’s losses.
CORN
After fighting off their lows on Monday, selling pressure resumed in March corn futures on Tuesday, losing 3.25 cents to close at $4.36 ½. Prices recovered slightly overnight but a test of the low end of the range around $4.35 remains likely.
New contract lows in Chicago wheat futures have added negative pressure. Crude oil saw a minor rebound this morning, which could lift some bearish pressure after hitting eight-month lows on Tuesday.
Corn continues to have a strong demand story between exports and ethanol production.
Corn crop development continues to progress well in Brazil and Argentina following recent rainfall.
SOYBEANS
Soybean futures continued their selling on Tuesday, trading 9.50 cents lower to $10.71 ¾. Futures officially closed the breakaway gap from late October when the Trump administration announced a trade deal with China.
Prices could find support at these levels, but a lot of the pressure is also coming from the product markets. Soybean oil is trading at a six-month low amid the lack of biofuel policy uncertainty. Soybean meal prices have been consolidating over the past week and have been holding above $300 per ton.
China continues to clear its soybean reserves, likely to make room for recent U.S. soybean purchases.
We maintain that South America currently lacks a bullish story that would support the market. Rain is landing in areas that need it. Our latest discussion with Nutrien Ag Solutions’ Eric Snodgrass did touch on the idea that if rain does persist too long through January, there could be some harvest delays. However, that would be a larger story for the Safrinha corn crop.
WHEAT
March Chicago wheat futures accelerated their trade to the downside on Tuesday, losing 11.25 cents to close at $5.09 ½. Prices also posted new life of contract lows after taking out the Oct. 14 low.
Open interest and volume were substantially higher yesterday in support of the selling. Bullish news remains limited. Prices may continue to test these levels to search for additional sellers.
Rumors floated yesterday that China canceled some purchases of U.S. wheat this week. China had booked only a couple of cargoes, but the idea of cancellations is negative for sentiment.
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PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS. FUTURES TRADING INVOLVES SUBSTANTIAL RISK AND IS NOT SUITABLE FOR ALL INVESTORS.