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Grains Report 01/17/2020


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WHEAT:
General Comments: Wheat markets were lower yesterday despite stronger world prices and relatively strong weekly export sales. World markets rallied in the face of reduced production potential for Australia and the problems in Russia with its crop. Russia has less Wheat this year and prices in the Black Sea region have strengthened. Black Sea prices were reported to be higher again this week. World prices will still be dictated by what happens in Europe and the Black Sea area and US prices will most likely remain a follower as the US tries to compete for sales. The lack of production in Russia and in the southern parts of the world means higher prices for now.
Overnight News: The southern Great Plains should get mostly dry conditions this week and some light and mixed precipitation at the end of the week. Temperatures should trend to near to above normal this week and near to below normal this weekend. Northern areas should see mostly dry conditions except for some light precipitation over the middle of the week and on Friday. Temperatures will average near to below normal. The Canadian Prairies should see mostly dry weather in the west and light snow in the east. Temperatures should be below normal.
Chart Analysis: Trends in Chicago are mixed to up with objectives of 595 March. Support is at 560, 557, and 551 March, with resistance at 568, 579, and 583 March. Trends in Kansas City are mixed. Support is at 477, 467, and 464 March, with resistance at 494, 504, and 510 March. Trends in Minneapolis are mixed. Support is at 547, 542, and 539 March, and resistance is at 553, 558, and 561 March.

RICE
General Comments: Rice closed mixed, with nearby months slightly lower and new crop months slightly higher. The USMC deal was passed by the Senate and now will be signed into law by President Trump. The trade deal was considered important for the Rice market. Mexico is the largest buyer of US Rice and so the market wants the trade deal to succeed. In fact, Mexico could have bought 100,000 tons of Texas Rice this week. The weekly charts still display a bullish market. Prices are profitable for producers at this time and that has caused many to sell a little Rice into the market. Some are also selling the next crop and the trade and open interest in the September contract is relatively large for the time of year. More selling from producers of the next crop is expected on any further rally attempts. Demand for US Rice remains generally positive and the export sales pace in general has been very good.

Overnight News: The Delta should get showers and rains tomorrow and again late in the week. Temperatures should be near normal. Mexico might have bought 100,000 tons of Texas Rice yesterday.
Chart Analysis: Trends are mixed to up with objectives of 1350 March. Support is at 1326, 1316, and 1307 March, with resistance at 1344, 1348, and 1356 March.

CORN AND OATS
General Comments: Corn and Oats moved lower in further selling that developed once the trade deal with China was signed. Some disappointment was expressed that the Chinese trade deal announcements did not include specifics and nothing about feed grains. The USMC trade deal was passed by the Senate yesterday and now will be signed into law by President Trump. It will keep the flows of agricultural goods among the neighbors in North America intact. The weekly export sales report was improved but still not at levels to excite the market. Export demand has been disappointing and traders had hoped for positive news. Ethanol and other industrial demand has started to improve but faces an uncertain road ahead. Much of the improved ethanol demand will be seen if and when China starts to buy. Feed demand was improved as seen in the latest quarterly stocks report. That report showed less supplies on hand than expected and has been the main bullish force in the market this week. There is little Corn available to the domestic cash market. The market has been short Corn as farmers have been holding.
Overnight News:
Chart Analysis: Trends in Corn are down with objectives of 370 March. Support is at 373, 371, and 367 March, and resistance is at 382, 386, and 388 March. Trends in Oats are mixed. Support is at 301, 295, and 288 March, and resistance is at 309, 316, and 318 March.

DJ US Ethanol Inventories Grows, Production Unseasonably High — Market Talk
11:36 ET – US inventory of ethanol has grown another 544,000 barrels to a total of 23.006M barrels, the EIA says Wednesday. This is the largest inventory reported by the EIA since late September. However, historically, ethanol inventories rise at this time of the year–and production, which rose by 33,000 barrels per day to a total of 1.095M barrels per day, is unseasonably high, according to data compiled by INTL FCStone. Corn futures on the CBOT showed little reaction to the report, likely due to trader preoccupation with the US-China phase one trade deal signing. (kirk.maltais@wsj.com, @kirkmaltais)

SOYBEANS AND PRODUCTS
General Comments: Soybeans and Soybean Oil were lower. Soybean Meal was a little higher on spreading against Soybean Oil. It was another down day for Soybeans due to the reaction to the trade deal announcements. There was nothing very specific in any of the news releases although China did say that purchases would come when the price was right and the demand was there. A lot will depend on the price of US Soybeans and those from Brazil and Argentina. Lower prices there will hurt overall demand here. China will return in the end to buy at least as many Soybeans as it did before the trade war, but when is the main problem and is compounded by good growing conditions and ideas of big crops in South America. Many US producers have put their Soybeans into storage and not selling. This has caused firm basis levels in the country and at the Gulf of Mexico.
Overnight News:
Chart Analysis: Trends in Soybeans are down with objectives of 911 and 884 March. Support is at 922, 918, and 916 March, and resistance is at 934, 936, and 939 March. Trends in Soybean Meal are mixed. Support is at 299.00, 298.00, and 296.00 March, and resistance is at 304.00, 307.00, and 308.00 March. Trends in Soybean Oil are down with objectives of 3320 and 3190 March. Support is at 3290, 3240, and 3200 March, with resistance at 3350, 3410, and 3440 March.

CANOLA AND PALM OIL
General Comments: Canola was lower along with the price action in Chicago Soybeans and on the China news. Demand from crusher is reported to be good and crush margins are reported to be strong. Farmers are not selling. Palm Oil was lower on news that India is reducing it buying from Malaysia due to a political dispute. Supplies could run short due to the demand and reduced production over the next couple of months. It was also lower on the outside markets especially in Chicago.
Overnight News:
Chart Analysis: Trends in Canola are mixed to down with objectives of 473.00 March. Support is at 473.00, 470.00, and 467.00 March, with resistance at 480.00, 485.00, and 490.00 March. Trends in Palm Oil are down with objectives of 2820 April. Support is at 2880, 2850, and 2800 April, with resistance at 3000, 3040, and 3050 April.

DJ Canadian Grain Handling Summary – Jan 17
WINNIPEG–The following are Canadian grain handling summary statistics
for the week ended Jan. 12, 2020. Figures in thousands of metric tons.
Source: Canadian Grain Commission.
Durum
Wheat Oats Barley Flax Canola Peas Corn Total*
COMMERCIAL STOCKS
This Week 2773.0 738.4 289.9 382.1 38.6 1515.6 306.6 82.6 6778.2
Week Ago 2714.1 738.5 286.4 403.5 34.4 1375.6 261.2 76.0 6539.3
Year Ago 2930.4 753.3 201.1 272.6 50.8 1045.5 362.3 338.4 6692.5
PRODUCER DELIVERIES
Note: revisions have been reported by licensed elevators that affected crops
year-to-date totals for barley this week.
This Week 475.8 79.0 45.5 79.5 6.0 431.1 88.1 8.0 1307.5
Week Ago 983.6 162.0 101.7 191.5 15.1 1039.1 188.5 9.7 2878.0
To Date 9470.0 2199.8 1251.4 1908.1 146.5 9127.8 2069.6 175.6 28093.6
Year Ago 10014.0 1605.3 1054.8 1651.4 161.4 8518.8 1650.5 261.4 27111.3
TERMINAL RECEIPTS
This Week 166.5 54.0 6.3 21.0 0.2 292.6 49.9 6.8 709.6
Week Ago 1023.9 355.6 58.1 176.5 4.7 530.7 111.3 19.5 2551.3
To Date 8589.5 2934.7 303.6 1074.3 61.4 4810.4 1342.7 94.7 22664.6
Year Ago 9997.7 1855.9 245.9 989.1 62.2 4844.9 923.6 572.1 24438.0
EXPORTS
This Week 100.5 67.0 41.3 27.5 0.3 318.0 84.0 0.0 687.1
Week Ago 755.5 279.6 139.4 142.9 17.4 269.4 112.1 0.0 1981.4
To Date 6921.3 2219.4 849.7 1030.8 80.9 4022.9 1326.0 12.5 18987.0
Year Ago 8194.0 1523.2 744.0 1014.6 118.2 4409.4 974.9 782.0 21319.4
DOMESTIC DISAPPEARANCE
Note: Important revisions have been reported by licensed elevators that
affected crop-year-to-date totals for canola and wheat this week.
This Week 71.3 2.8 6.7 34.7 0.6 216.7 6.2 7.3 373.2
Week Ago 199.3 37.1 14.7 82.1 2.4 540.3 11.0 19.8 976.7
To Date 1879.8 196.1 135.0 644.5 19.9 4732.7 103.5 303.8 8864.3
Year Ago 1990.6 158.8 127.2 496.3 23.9 4054.2 95.2 551.9 8869.7
*Totals include data from other crops not shown including rye, soybeans,
canary seed, mustard seed, beans, lentils and chickpeas.
Source: Commodity News Service Canada (news@marketsfarm.com, or 204-414-9084)

Midwest Weather Forecast: Some rain and snow tomorrow and late in the week. Temperatures should average near to above normal in the south and east and near to below normal in the north and west.

US Gulf Cash Basis
Corn HRW SRW Soybeans Soybean Meal Soybean Oil
January +50 Mar +164 Mar +110 Mar +51 Mar +12 Mar N/A
February +54 Mar +112 Mar +50 Mar
March +57 Mar +112 Mar +50 Mar
All basis levels are positive unless noted as negative

DJ ICE Canada Cash Grain Close – Jan 16
By MarketsFarm
WINNIPEG, Jan. 16 (MarketsFarm) – The following are the closing
cash canola prices from ICE Futures for Thursday, January 16.
Source: ICE Futures
CANOLA
1 Canada NCC Best Bid
Spot Price Basis Contract Change
*Par Region 441.80 -34.00 March 2020 dn 5.70
Track Thunder Bay 483.00 7.00 March 2020 up 0.20
Track Vancouver 496.00 20.00 March 2020 up 0.20
All prices in Canadian dollars per metric ton.

DJ Malaysian PM Cash Market Prices for Palm Oil – January 17
The following are prices for Malaysian palm oil in the cash market at 1000 GMT Friday, supplied by commodity broker Matthes & Porton Bhd.
Prices are quoted in U.S. dollars a metric ton, except for crude palm oil and palm kernel oil, which are in ringgit a ton. Palm kernel oil prices are in ringgit a pikul, a Malaysian measurement equivalent to 60 kilograms.
Refined, bleached and deodorized palm oil, FOB, Malaysian ports
Offer Change Bid Change Traded
Jan 752.50 -10.00 Unquoted – –
Feb 752.50 -10.00 Unquoted – –
Mar 750.00 -10.00 Unquoted – –
Apr/May/Jun 712.50 -15.00 Unquoted – –
RBD palm olein, FOB, Malaysian ports
Offer Change Bid Change Traded
Jan 755.00 -10.00 Unquoted – –
Feb 755.00 -10.00 Unquoted – –
Mar 752.50 -10.00 Unquoted – –
Apr/May/Jun 715.00 -15.00 Unquoted – –
RBD palm stearin, FOB, Malaysian ports
Offer Change Bid Change Traded
Jan 755.00 -07.50 Unquoted – –
Palm Fatty Acid Distillate, FOB Malaysian ports
Offer Change Bid Change Traded
Jan 680.00 -02.50 Unquoted – –
Crude palm oil, Delivered Basis, South Malaysia
Offer Change Bid Change Traded
Jan 2,990.00 -40.00 Unquoted – –
Palm kernel oil, Delivered Basis, South Malaysia
Offer Change Bid Change Traded
Jan 228.00 -02.00 Unquoted – –
($1=MYR4.0510)

DJ China Dalian Grain Futures Closing Prices, Volume – Jan 17
Soybean No. 1
Turnover: 108,366 lots, or 4.43 billion yuan
Open High Low Close Prev. Settle Ch. Vol Open
Settle Interest
Mar-20 3,438 3,438 3,406 3,407 3,411 3,425 14 10 1,257
May-20 4,092 4,118 4,076 4,100 4,103 4,096 -7 100,530 129,946
Jul-20 4,101 4,105 4,100 4,100 4,101 4,101 0 13 28
Sep-20 3,992 3,992 3,958 3,975 4,002 3,973 -29 7,685 16,964
Nov-20 3,823 3,850 3,812 3,850 3,836 3,824 -12 14 250
Jan-21 3,876 3,877 3,844 3,850 3,893 3,857 -36 114 260
Corn
Turnover: 327,474 lots, or 6.36 billion yuan
Open High Low Close Prev. Settle Ch. Vol Open
Settle Interest
Mar-20 1,897 1,904 1,888 1,901 1,887 1,893 6 55,045 203,810
May-20 1,946 1,949 1,940 1,947 1,935 1,943 8 233,659 822,612
Jul-20 1,970 1,971 1,964 1,970 1,962 1,967 5 382 4,930
Sep-20 1,992 1,995 1,986 1,993 1,984 1,989 5 35,459 204,563
Nov-20 2,005 2,007 2,000 2,007 1,996 2,002 6 495 1,657
Jan-21 2,014 2,017 2,010 2,015 2,006 2,012 6 2,434 3,443
Soymeal
Turnover: 1,007,842 lots, or 27.03 billion yuan
Open High Low Close Prev. Settle Ch. Vol Open
Settle Interest
Mar-20 2,619 2,621 2,585 2,607 2,614 2,604 -10 135,313 219,950
May-20 2,688 2,690 2,661 2,682 2,682 2,676 -6 702,051 1,568,866
Jul-20 2,720 2,721 2,695 2,711 2,713 2,710 -3 795 4,967
Aug-20 2,761 2,766 2,758 2,759 2,758 2,760 2 6 105
Sep-20 2,778 2,778 2,752 2,770 2,770 2,765 -5 164,839 1,147,251
Nov-20 2,797 2,797 2,788 2,795 2,797 2,793 -4 15 2,038
Dec-20 2,813 2,816 2,806 2,811 2,813 2,811 -2 32 215
Jan-21 2,820 2,823 2,800 2,818 2,816 2,814 -2 4,791 5,042
Palm Oil
Turnover: 1,192,518 lots, or 72.83 billion yuan
Open High Low Close Prev. Settle Ch. Vol Open
Settle Interest
Feb-20 6,496 6,496 6,496 6,496 6,524 6,496 -28 1 158
Mar-20 6,404 6,440 6,404 6,406 6,442 6,420 -22 35 498
Apr-20 – – – 6,228 6,228 6,228 0 0 9
May-20 6,104 6,144 6,090 6,126 6,134 6,120 -14 1,143,525 596,920
Jun-20 5,984 6,006 5,984 6,006 5,994 5,992 -2 5 11
Jul-20 – – – 5,942 5,942 5,942 0 0 307
Aug-20 – – – 5,858 5,858 5,858 0 0 7
Sep-20 5,810 5,836 5,780 5,828 5,818 5,810 -8 48,012 77,218
Oct-20 – – – 5,792 5,798 5,792 -6 0 4
Nov-20 – – – 5,758 5,758 5,758 0 0 10
Dec-20 – – – 5,730 5,730 5,730 0 0 91
Jan-21 5,688 5,736 5,672 5,718 5,686 5,716 30 940 1,294
Soybean Oil
Turnover: 326,680 lots, or 21.52 billion yuan
Open High Low Close Prev. Settle Ch. Vol Open
Settle Interest
Mar-20 6,664 6,664 6,664 6,664 6,664 6,664 0 370 39
May-20 6,584 6,620 6,576 6,596 6,630 6,598 -32 286,862 565,669
Jul-20 – – – 6,570 6,572 6,570 -2 0 418
Aug-20 6,588 6,588 6,496 6,496 6,538 6,536 -2 5 2
Sep-20 6,506 6,522 6,486 6,506 6,518 6,504 -14 39,196 158,864
Nov-20 6,398 6,456 6,398 6,456 6,436 6,426 -10 2 211
Dec-20 – – – 6,552 6,552 6,552 0 0 0
Jan-21 6,530 6,548 6,516 6,534 6,564 6,534 -30 245 810
Notes:
1) Unit is Chinese yuan a metric ton;
2) Ch. is day’s settlement minus previous settlement;
3) Volume and open interest are in lots;
4) One lot is equivalent to 10 metric tons.



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About the author


Jack Scoville is a futures market analyst specializing in grains, softs, rice, oilseeds, and tropical products such as coffee and sugar.

He offers brokerage services to an international clientele of agricultural producers, processors, exporters, and other professional traders.

Jack writes daily comments of the many products he specializes in, in three languages, English, Spanish, and Portuguese.

He has been quoted by most major wire services including Dow Jones, AP, and Reuters. His comments have also appeared in newspapers around the world and on various radio and television shows.

Jack offers a dedicated and high quality service for his clients. His industry contacts in South America, Europe, Asia, and North America provide him with a unique view of the markets. He also uses his own charting program for technical traders.

Jack began working in the futures industry over 30 years ago and spent 10 years working on the floor of the Chicago Board of Trade in various roles. He has been a broker off the floor since then and has been with The PRICE Futures Group since it was established in 1988.

Contact Jack Scoville: (800) 769-7021 or at jscoville@pricegroup.com

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