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RSS By: Joe Vaclavik

Joseph Vaclavik is the president at Standard Grain in Chicago. Standard Grain provides futures and options brokerage to farms, feedlots, elevators, processors, end-users and traders. Visit www.standardgrain.com for more information.

 

Beans Sharply Higher, Corn/Wheat Up Slightly...

Feb 15, 2012

 

·         Soybeans sharply higher overnight while corn and wheat reluctantly follow along; Beans influenced by S. American weather and rumors of China demand
·         China Vice President in Iowa today; Visit designed to demonstrate China’s importance to the US Farm Belt; Chinese trade delegation expected to sign agreements to buy US soybeans in Des Moines; Last year’s delegation signed a deal to buy more than 11mmt, which was the largest ever one-off sale at the time; Today’s expected to be much smaller
·         China Central Bank believes Euro debt issues can be solved, China will expand investments EU
·         China soybean imports likely to be down 14% in Feb according gov’t sources there; China likely to import 3.97mmt this month
·         Cattle futures hit new all-time high yesterday, Feb cattle trading up to $126.90; Nearby feeders also shooting higher with the march contract trading above $156.00
·         Soybeans gaining sharply on corn during last several session; SX – 2CZ up over 70 cents since the last trading day in January (chart on next page); Beans aggressively trying to win back some acreage; the “battle” continues
·         Daily Technical Numbers                    Support                        Resistance
o   Corn (March)                          6.28, 6.14                    6.40, 6.43
o   Soybeans (March)                   12.50, 12.45                12.62, 12.75
o   Wheat (March)                       6.28, 6.14                    6.43, 6.53
 
 
Soybean strength has been the saving grace for corn and wheat bulls this week. Corn still looks like it wants to at least test last week’s lows near 6.28/March. Big open interest in March calls above the market may keep a lid on corn until next Friday. Open interest in corn has increased by 87,000 contracts in the last 3 weeks, while the market has traded a tight range from 6.27 to 6.52. A breakout of this range, to the downside especially, could result in massive liquidation from new longs. Fundamentally, a large acreage number at the end of March is really weighing on the market as old crop stocks remain adequate for the time being. Dec corn will remain the weak link until we know more about the ’12 crop.   
 
As always, call the office with questions or concerns.
 
Regards,
Joe Vaclavik
(312) 462-4438
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