EHedger Afternoon Grain Commentary 1/3/13

Published on: 16:29PM Jan 03, 2013

Grains and oilseeds closed modestly lower after more soybean cancellations were reported.  March corn settled 1 ½ cents lower at $6.89 ¼, March soybeans 5 ¾ cents lower at $13.86 ½, and March wheat up ¼ of a cent at $7.55 ½.

The USDA reported the cancellation of 315,000 MTs of US soybeans to China which sent soybeans back to their overnight lows again at $13.72 ½.  The soybean strength over the past few months has been heavily dependent on export demand.  The sale cancellations by China have certainly sent unsettling signals to the bulls. Favorable weather in South America also continues to weigh on soybean prices.  With record production potential in SA, the world stocks to usage ratio will look much better in July than it does currently.  This weakness could also be related to pre-fund liquidation in expectation of next week’s rebalancing. In my opinion we still need to see the January 11th stocks report for further direction.  We may have seen a short term technical bottom reached today based on the front month soybean chart. 

Soybeans (Front Month)Front Month Soybeans

The US Dollar Index was exceptionally strong today after the FOMC Minutes.  Some Fed members want to end the QE programs at the end of 2013, well before the prior Minutes report suggested.  Either way it shows some dissention between the officials on what the right policy approach is.  A stronger dollar could have contributed to some of today’s weakness.  We will have to see if this change in sentiment continues to affect the dollar positively.

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