Daily Comments

While temperatures here in Northern Illinois have now climbed into positive territory this morning for the first time in days, +5 degrees Fahrenheit as I write, grain and soy markets remain in the deep freeze.  While I believe we should begin to see these markets warm up soon as well, most likely after this week, there appears to be little on the horizon that may break the bears’ hold for the time being.

The production estimate cuts in Brazil appear to have had little to no effect on prices at this time, which I suspect is partially due to the fact that estimates for the Argentine crops continue to improve.  The November crush in this country did set a new record high of 195.328 million bushels, but soybean oil stocks rose more than anticipated.  They came to 1.36 billion pounds, compared with an estimated 1.29 billion, and the previous month at 1.214 billion.  Bean oil did not take kindly to the news.

France AgriMer released a few S/D updates this morning.  They raised corn ending stock to 2.18 MMT from 2.  Barley stockpiles were bumped to 2.11 MMT from 1.81, and wheat was raised from 3.22 MMT to 3.44.

There is nothing to report from the export world this morning.  Weekly sales will be delayed until Friday morning.

Here are a couple of dates you may want to mark on your calendars: February 15th/16th and March 28th.  The first will be the 100th annual Agricultural Outlook Forum, where the USDA will provide the first statistical snapshot of the year for what we may produce in 2024, and the second will be the release of the Prospective Plantings, and the Quarterly Grain Stocks reports.

From the economic front, we find that Export prices in December were down .9% while Import prices were unchanged.  Advance Retail Sales in December were up .6% versus the expected .4% increase.  According to Rebook, Retail Sales this month remain solid.  Last week, they were 5% higher than a year ago, and for the first two weeks of the year are up 5.5%.

In the macro markets this morning, we find energies, metals, financial instruments, and equities under pressure while the dollar is positive.

 

Wheat

Unable to keep March wheat beneath 5.92 for the close last Friday, bears returned again yesterday to give it another go, and this time were successful.  In the process, we nearly completed a 79% retracement of the current trading range that was established in November/December and posted the lowest close since the 28th of November.  After that dour performance, it would not have come as a shock to see prices follow-through lower overnight, but the fact that we did not may suggest we are close to exhausting the mover.  Oscillators have just slipped into the oversold zone but point lower, so we need to remain patient for another day or so.  Ideally, we will be positioned for a recovery by the beginning of next week.  The next cycle count is on the 22nd and will mark the completion of the 2nd cycle of 90-calendar days from the July peak, with the next following then on the 2nd, the 14th, and the 26th.

Lower lows for KC futures yesterday, taking us to within striking distance of the November reaction low at 5.95.  We have yet to see any follow-through to speak of overnight, but with oscillators pointed lower the path of least resistance remains to the downside.  There remains the potential for a stab to the 5.95/5.90 zone, but I believe we should have this push lower completed by the weekend.  Cycle counts line up for the 22nd, the 2nd, the 14th, and the 26th.

Corn

March corn did not extend to a lower low yesterday, but bears have returned again overnight to try and make that happen.  Oscillators remain in their favor, and it would come as no surprise to see prices push deeper into this 4.43/4.38 target zone.  Cycle counts line up between tomorrow and Monday, and we should have this swing lower completed at that time.  The next cycle counts then come in between the 29th/1st and the 9th/12th.

Since gapping lower on the first trading day of the year, December corn has never really looked back and, with the overnight pressure, has now lost 28-cents in price since the close at the end of last year.  By no means is there anything in the current price action to suggest the bear has had its fill, I believe we should be within a day or so of completing this leg lower.  If correct, the question then becomes, what kind of upside potential will there be on a correction?  Once we have a low confirmed, I will outline possible retracement targets.  Cycle counts line up between the 18th/22nd, the 29th/1st, and the 9th/12th.

Soybeans

March beans have yet to move outside of the range posted last Friday.  Be that as it may, price action remains a bit defensive, so we have nothing yet to confirm a 3rd wave low is in place.  Tracking semi-sideways through the balance of the week should have us positioned for a corrective rebound, and if the existing low holds, there should be potential for a poke back to at least the 12.65/12.80 zone.  Cycle counts line up between the 19th/22nd, the 2nd, the 13th/14th, and the 26th.  That final date will mark the often-important completion of the 3rd cycle of 90-cd from the low last May.

While not down to last week’s low just yet, November beans are under pressure again overnight, and with oscillators pointer lower, the path of least resistance remains to the downside.  I would not be surprised to see this contract make a stab down to 11.72, but as with many of these other markets, we should have a reaction low in place by the end of this week.  After today, the next cycle counts line up for the 22nd, the 2nd, the 13th/14th, and the 26th.

Soy Oil

March bean oil is under pressure again overnight and appears headed for a test of the current low at 46.30.  A closing violation of that mark and the door swings open for a push down to 44.39 to possibly complete a 3rd wave.  Cycle counts line up between the 19th/22nd.

Soy Meal

March meal has extended its rebound overnight, nearly reaching the initial retracement targets between 374.40/375.50.  Oscillators are pointing higher, so we may have another day or so of strength to look forward to and may see a run to the 380/381 level.  Cycle counts line up between the 19th/22nd.

Cotton

While not really making much, if any headway, bulls have not thrown in the towel in the cotton market quite yet.  Be that as it may, oscillators are quite overbought and showing signs of a possible sale, so I suspect their days are numbered.   Cycle counts line up through tomorrow and then between the 26th/30th.

Lean Hogs

April hogs closed lower for the second day yesterday, this time finishing below the previous day’s low for the first time since prices turned higher at the beginning of the year.  This should confirm we have turned the corner to the downside for now and should have room for a slide back to at least the 75.56 to 74.65 zone and possibly 73.35.  The next cycle counts line up for the 22nd.

Live Cattle

April cattle had solid strength to start the week, but it stopped short of pushing through critical resistance at 175.72.  Oscillators remain positive, so there remains potential to reach beyond this level, but closing above that mark could be another story.  Failure to do so before the weekend would not be a good sign for the bull.