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Morning Market Review for Jan. 23, 2019

Grains try to tilt higher. (Comments are updated by 7:30 a.m. Central Time.)

Overnight trend:
 Up 1 to 2
Soybeans: Up 4 to 5
Wheat: Up 2 to 3

Overnight gains seek to correct some of Tuesday’s losses

Yesterday, grain markets resumed a long holiday weekend with some slight to moderate losses after focusing on U.S.-China trade negotiations (or lack thereof), which have struggled to develop in recent weeks. Corn, soybeans and wheat all crept around 0.5% higher overnight.

Sharp losses on Wall St. Tuesday also hope to see a reversal today, with the Dow up around 90 points ahead of the open. The partial federal government shutdown, now in its 33rd day, continues to create headwinds for potential gains.

Global stock prices were narrowly mixed today, with Asian and European markets neglecting to move more than 0.5% in either direction. Some rumbling about a slowing global economy continues, however.

Energy prices try to recapture some moderate losses from Tuesday, meantime. Gasoline and diesel trended around 0.75% higher in overnight trading, with gasoline taking fractional gains so far. The U.S. Dollar softened fractionally.

Corn prices attempted to push higher overnight, anchored by some positive export inspection data yesterday but still pensive over wavering U.S.-China trade.

Export inspections totaled 43.6 million bushels last week – ahead of the prior week’s tally of 39.9 million bushels and just above trade expectations that ranged between 35 million and 43 million bushels. Mexico was the leading destination for U.S. corn export inspections last week, with 12.7 million bushels.

USDA’s weekly export sales report, which typically is released each Thursday morning, continues to be put on hold until the ongoing partial government shutdown is resolved.

Taiwan purchased 2.6 million bushels of corn, likely sourced from Argentina, in an international tender for shipment in April.

China has imported about 139 million bushels of corn in 2018, according to the latest customs data.

Overseas markets tracked higher today, with March futures in China up nearly 2 cents to $6.859 and March Paris futures in midday trade steady at $5.260 after adjustments for volumes and currencies. 

The preliminary report from the CBOT showed daily futures volume hitting 361,689, with open interest moving up 16,760. Options volume of 57,005 still significantly favors calls (36,296) over puts (20,709).

Implied volatility in at-the-money March options was 15.39.

Bottom line:  A smaller 2018 crop could help corn turn the corner, though the market suffers from fatigue. For more, see Bryce Knorr’s Corn Outlook. For specific recommendations and daily charts, subscribe to our free E-newsletter, Farm Futures Daily

Soybeans look to recapture some of Tuesday’s losses despite posting some healthy export inspection data yesterday. Unresolved U.S.-China trade negotiations continue to be a thorn in the side of grain prices.

China did make a welcome reappearance in last week’s soybean export inspection tally from USDA, reemerging as the No. 1 destination for the first time in months, with 15.3 million bushels.

Total soybean export inspections last week reached 40.8 million bushels, besting the prior week’s total of 40.0 million by a slim margin and landing in the middle of trade expectations, which ranged between 31 million and 47 million bushels.

European Union soybean imports during its 2018/19 marketing year are up 11% from a year ago, having reached 286.6 million bushels as of January 20.  

Vegetable oil markets in Asia moved higher today. March soybean oil futures in China reached 35.55 cents, with March palm oil futures in Malaysia moving up to 24.69 cents.

For international oilseed markets, March soybean futures in China held mostly steady at $13.16, with February rapeseed futures in Paris midday trade up 4.5 cents to $9.625 and March  Winnipeg canola overnight rising fractionally to $8.278 after adjustments for currencies and volumes. 

The preliminary report from the CBOT showed daily futures volume hitting 196,809 on open interest that moved 6,666 higher. Options volume of 64,408 is heavily favoring puts (41,447) over calls (22,961) at this time.

Implied volatility in at-the-money March options reached 15.51.

Bottom line: Fundamentals remain bearish but are improving a little while charts try to maintain their bullish uptrend. For more, see Bryce Knorr’s Soybean Outlook. For specific recommendations and daily charts, subscribe to our free E-newsletter, Farm Futures Daily

Wheat prices continue to find traction overnight after taking moderate gains yesterday on rumors of tightening Russian supplies and more competitive U.S. prices. Most contracts drifted around 0.5% higher ahead of today’s open.

The latest USDA export inspection data was mainly neutral for wheat. Wheat export inspections last week reached 19.0 million bushels, slightly down from the prior weeks’ total of 20.1 million bushels but on the high end of trade estimates that ranged between 15 million and 22 million bushels. Egypt was the No. 1 destination for U.S. wheat export inspections last week, with 4.3 million bushels.

European Union soft wheat exports so far in its 2018/19 marketing year are down 27% after reaching 330.7 million bushels as of January 20.

Several international tenders were announced last night. The larges came from Turkey, which issued one for 11 million bushels with a deadline of January 30. The grain is for shipment in February or March.

The storm over the next week will deliver plenty of rain and snow to the eastern U.S. between now and January 30 – accumulating another 1.5” to 2” of moisture during that time. The Midwest and Plains will stay relatively drier, however. The official 6 to 10 and 8 to 14-day forecasts, out yesterday, show briskly colder weather on its way next week, and the latest updates from the ensemble model this morning show mostly colder- and drier-than-normal weather on its way next.

In overseas markets, March futures for Eastern Australian Wheat hit $8.308, with March futures in Paris midday trade adding a penny to reach $6.379 after adjustments for currencies and volumes.  

Volume in soft red winter wheat reached 111,442 on open interest that moved just 4 higher. Options volume of 41,538 moderately favors calls (26,453) over puts (15,085).

Implied volatility in at-the-money March options was for 21.01.

HRW volume was for 59,054, with options volume of 2,056 narrowly favoring puts (1,076) over calls (980).

Bottom line: Prospects for lower than expected acreage in 2019 could help firm the market, but confirmation won’t be coming soon from USDA. For more details on the outlook, see the Wheat Outlook. For specific recommendations and daily charts, subscribe to our free E-newsletter, Farm Futures Daily


 Explanation of pivot points. 

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This information is not to be construed as an offer to sell or a solicitation or an offer to buy the commodities herein named. The factual information of this report has been obtained from sources believed to be reliable, but is not necessarily all-inclusive and is not guaranteed as to the accuracy, and is not to be construed as representation. The risk of trading futures and options can be substantial. Each investor must consider whether this is a suitable investment. Past performance is not indicative of future results.
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