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Commentary
Traders returned to a pattern of technical selling on Wednesday that led to moderate midweek losses for corn, soybeans and wheat. Consider we are two sessions away from one of the most important trade reports of the year on Jan 10th and you have some evening up ahead of the report. Despite what the numbers say Friday; it’s my opinion that large domestic and global stocks could continue to be problematic for sustained rallies that have capped rallies in recent weeks. One also has to consider that the US producer is still sitting on a lot of grain from last year’s harvest. More corn than beans in storage in the US in my view amid sizable harvests of corn and soybeans from South America coming. However, one can never rule out a curveball from USDA that’s bullish versus expectations. For soybeans I’m watching how the USDA comes in with ending stocks. They were slashed in November to 470 million from 550 million in October and then left alone at 470 in the December WASDE. The average trade guess for beans on Fridays WASDE is 457 million bushels. The range of guesses is 495 million on the upside and 390 to the down. Any number that comes in near the upper or lower end of the ranges would have a sizable impact in price on report day. However, should they come in 10 million above or below the average trade guess, then the market goes back to looking at weather in S.A. Today, soybean prices were stuck in neutral with low volume and a limited trading range waiting for Friday’s USDA data dump, despite USDA announcing a new morning flash sale of 120,000 tonnes of beans to Unknown or China. Another strong up move in the US dollar today kept the market under pressure even though weather remains hot and dry for much of South America for the next 10 days. However, the 11 – 15 day forecast still holds chances for better precipitation in Argentina and southern Brazil and the extended forecast again will be very important for market direction after the USDA report. It is my belief If widespread rains do develop in the forecasted timeframe of January 16 – 22nd, I could see March beans potentially retesting the December lows. Reminder agriculture futures markets will close early Thursday at 12:15 PM Chicago time for the National Day of Mourning for former President Carter
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Sean Lusk
Vice President Commercial Hedging Division
Walsh Trading
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