- The DOW opened lower and recovered strongly in the morning hours as investors saw the break as a new buying opportunity. The DOW is back above 25,200, and this has offered a peg of support to raw material markets. We would also note that Goldman continues to push commodities as a buy based on their opinion on an expanding world economic (GDP) outlook. We agree with this view, but it’s not the kind of fundamental that causes commodities to rally each and every day. Whether new index fund investment shows up on the roll today will be closely monitored. We look for a mixed Chicago close with traders positioning short soybeans against long grains.
- CONAB will be out Thursday morning with their Brazilian corn and soybean crop estimates. We expect that they will raise their Brazilian soy crop by 1.5- 2.0 million mt and their corn crop by 500,000-1.0 million mt. We peg the soybean crop at 111.6 million mt and the corn crop at 93.0 million mt.
- Chicago brokers report that funds have bought 1,700 contracts of soybeans, 3,500 contracts of corn, and 2,200 contracts of Chicago wheat. In soy products, funds have bought 2,500 contracts of soymeal and sold 3,700 contracts of soyoil. Fund managers are back to spreading long meal against short soyoil.
- There have been rattling’s that China may target US soybeans for tariffs if the current trade environment does not improve. We suspect that it’s just tough talk (as of today), but ag interests are worried following the unexpected US sorghum anti-dumping announcement on Sunday. Trade uncertainty leaves Chicago vulnerable to a sharp price declines on rumors. We hope and doubt that China will act against US soybeans, unless the Trump Administration takes a sharper aim against China’s manufactured goods.
- Funds are pushing the wheat market higher on short covering ahead of the USDA February crop report. Corn is trying to follow, with traders expecting a bearish USDA soybean report, which is capping rallies. The weekend rains for Argentina are a big deal as crops there are in need of immediate moisture.