- It has been a firm morning of trade in Chicago grain and oilseed markets at midweek following light overnight correction. Soybean meal continues to lead markets higher with March meal trading $2-3 higher, while March soybeans have cleared Tuesday’s high and traded at the best level since early December. Moreover, the spot soybean chart is back above major trendline resistance. Corn has inched higher behind the soy markets, while the wheat markets have been set back 3-5 cents on chart related selling overnight, though funds returned as buyers at the morning open.
- Fund buying in the soybean and meal market has been less intense than earlier in the week, but markets found good demand on the overnight break. Chicago brokers estimate that funds have bought 6,000 contracts of corn through the morning, have been flat for the day in wheat, and bought 6,000 contracts of soybeans. In the soy product markets, funds are thought to have bought 3,000 soymeal contracts, and have been flat in soyoil.
- The EIA reported ethanol production for the week ending Feb 9 was off 4% from the previous week and totaled 1,016 thousand barrels per day. This was the lowest weekly total since the start of the year, and the second lowest figure since early October. The decline was a bit of a surprise given good ethanol margins, and traders wonder whether the lower figure is because plant(s) were forced to shut down for maintenance. While production was lower, US blenders used 882,000 barrels/day, which was the largest usage in seven weeks, and ethanol stocks were drawn down 3%. Estimated ethanol plant margins this week are holding positive across the Midwest, with an average Cornbelt plant margin of $0.13/gallon. DDG prices have eased, but average close to $150 across the Cornbelt, or the highest since July 2016.
- The GFS weather forecast at midday offers little relief for Argentine crops. Little or no rains are expected to fall over the next five days, while the model shows better chances in the 6-10 day forecast. Most of the Argentine soybean belt is expected to realise less than an inch of rain over the next ten days, and accompanied by temperatures stretching into the upper 90’s later this week. Crops continue to roll backwards, which is quickly shifting world corn and soymeal demand.
- The corn and soy charts look to be confirming technical breakouts, and markets are expected to add premium, at least until the Argentine weather forecast show widespread soaking rains.