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EHedger Afternoon Grain Commentary 1/22/13
Jan 22, 2013
Grains and oilseeds started the day stronger after the long holiday weekend but wheat was unable to hold the early gains. March wheat closed 12 cents lower at $7.79 ¼, March corn up 1 cent at $7.28 ½, and March soybeans up 22 ½ at $14.51 ¾.
Soybean crush margins are still very strong in China which was a large part of today’s rally. The USDA announced an optional origin soybean sale to China for 13/14. Soybean techincals also look favorable with a close back above the 200 day moving average (grey line).
Wheat has been choppy on rumors that Russia will be lowering their import duty on wheat continue to float around the market. Russian flour prices are at a record high which may mean they will have to take measures to cool domestic prices before their new crop harvest. If they announce the removal of the tariff it may open the door for imports of French wheat. These rumors were favorable for prices on Friday but the enthusiasm seems to have left the market as we erase those gains.
March corn found sell pressure after the wheat market’s weakness Tuesday. It continues to trade in a range-bound manner. Just like late November and early December, March corn was supported above the 50 day moving average (red line) but was unable to break through the 100 day (blue line). Since the January reports were rather bullish I am inclined to believe corn will hold support this time but we always want to remain vigilant for closes below that level.
Weather in Brazil remains favorable for most areas. Southern Brazil will need to start seeing rains in the forecast soon but for now it is not a major concern. Argentine weather is drier than they would like to see especially into mid-next week. This could support price action in the US if the forecast continues to come in without adequate moisture. We will continue to monitor.
For now we expect old crop prices to be supported on setbacks due to the tight supply. The large acreage expected for 2013 may continue to keep new crop prices resisted. Have a great week!
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