Soybean Market Picks Up Steam

03:38PM Feb 07, 2020
March corn was up 2¢ and March soybeans were up 10¢ for the week ending Feb. 7. March wheat was up 5.5¢. Check current market prices.
( AgWeb )

March corn was up 2¢ and March soybeans were up 10¢ for the week ending Feb. 7. March wheat was up 5.5¢. Check current market prices.

“It feels like we are way off from our recent highs in corn, although in reality it is only about 10¢,” says Jamie Wasemiller, senior market analyst for Gulke Group. “We had good exports sales this week but are still lagging significantly versus last year.”

Corn Inspections for the marketing year as of Feb. 4 are 48% less than they were a year ago. 

“That is a huge deficit we have to try and resolve over the rest of the year but hope springs eternal,” Wasemiller says. “With that being said we have seen corn test near the lows of the year with short-term support around $3.76, and each time we have closed 2¢-4¢ higher on those days.”

Soybean prices had around a 20¢ trading range this week, and prices closed the week in the top half of that range. 

“Soybeans are still below that $9 area, which we view as a critical price target,” he says. “But we did see the market rally around 10¢ this week. It was good to see what the market did in a week where we continue to see an increase in the coronavirus cases, which may imply we have digested a lot of the negative news associated with the virus.”

Wasemiller says there is talk China is potentially using the virus as a reason to back off the recent trade commitments. 

“China bought upwards of 10 cargoes of soybeans this week from South America, so it looks like they are still in play for imports of soybeans and we just have to wait for our turn with China,” he says.

Soybean exports posted a good week, with total grain inspections for the year being 23% higher than a year ago. 

“Technically we have seen some of our shorter indicators turn positive with longer-term indicators trying to do the same but not quite there yet,” Wasemiller says. “March soybeans appear to have a bull flag formation, so we will see if we can continue that going into and through next week’s report.”

The wheat market, he says, appears to be trying to buy time. 

“We had pretty meager exports this week with grain inspections 12% higher than last year,” Wasemiller says. “There may have been more buying early on in the marketing year due to quality concerns, and we are now seeing that countries are not as nervous to buy wheat outside of the U.S.”

Technically, he says, wheat might look a little worse than corn and soybeans, but it looks like the market is trying to turn around to the good.

USDA will release its monthly Crop Production and World Agricultural Supply and Demand Estimates reports on Tuesday, Feb. 11. 

“Historically the February report has not varied differently from their previous months’ report,” Wasemiller says. “But I think the trade will have their eyes on any kind of increase there will be in South American production numbers and what that does to the world’s ending stocks.”

Additionally, he says, the trade will be watching for signs of quality issues from the 2019 crop.

“We are hearing about poor-quality corn lowering its normal conversion rates to ethanol so we could see an increase the amount of corn needed for ethanol production,” he says.

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