For the week, March corn was down 2½ cents, January soybeans climbed 11¾, January soybean meal was up $.90 per short ton, with January soybean oil down 21 points. March Kansas City wheat down 18 1/4, March Chicago wheat down 2½ cents, March Minneapolis up 1¾ cents.
While there is daily volatility in the grain markets, Jamie Wasemiller, market analyst with The Gulke Group, says the weekly closes were pretty quiet and did not change the technical or chart picture. The one exception was Kansas City wheat, which was down 18 cents, but it didn’t change their technical indicators negative.
Wasemiller says the fund traders are also watching key moving averages, which have slid closer to current prices and are influencing market action.
“I would encourage farmers to look at the charts,” he says. “The 50-day and the 200-day, maybe throw in the 100-day average as well. If you look at those, it’s kind of uncanny how they become support levels or they become resistance levels. But factor that into what you’re thinking or what you’re reading if you are doing some trading in a timeframe where there’s not a whole lot of information to trade from.”
Despite the lack of positive news, Wasemiller has been impressed with how the grain markets have failed to break. He attributes some of that to the lack of farmer selling, especially corn.
“Farmers have been reluctant sellers of grain partly because they all want $5,” he explains.
He says the dry conditions in many areas of the Corn Belt this winter is also gaining attention.
“There is some general concern out there, and I think that’s another reason farmers are reluctant to sell,” Wasemiller adds.
The trade is also trying to hold some South American weather premium with uncertainty surrounding the Brazilian soybean crop and the second crop safrinha corn.
“Corn is holding a sideways trading range and soybeans have built good support around $13. That is a positive thing and shows traders are still concerned about early growing conditions,” he mentions.
If the soybean market holds these levels with the current weather models staying fairly dry that is positive, but if they receive rains in Brazil, Wasemiller thinks soybeans could fall 20 to 30 cents, back to the lows set in mid-October.
The Gulke Group works with some of the larger farmers in Brazil, and they are getting reports on the ground that Goias and Mato Grosso, which account for 40% of the soybean production, are the driest they have been in 44 years.
“Normally this time of year those areas receive about two inches of rain per week, and they need that with their sandy soils, but this continues to set the soybean production back,” Wasemiller says.
They are also watching economic developments in Argentina with the devaluation of their peso this week by 54% and some changes in their export taxes. The tax on corn and wheat was raised by 3% to 15%, while soybeans stayed at 33%. However, the longer-term goal is for these taxes to be eliminated, which will make them more competitive in the world corn and soybean export market.
For more market information contact Jamie at info@gulkegroup.com.
