Charts of the Day – January 28, 2020

Corn
Soybeans
Chicago Wheat

Afternoon Market Commentary – January 28, 2020

by: Chris Betz

Corn Soybean Wheat
Old Crop (futures month, change, settle price) CH0 6’0 386’4 SH0 2’2 895’0 WH0 2’4 569’6
New Crop (futures month, change, settle price) CZ0 2’2 397’4 SX0 3’0 930’4 WN0 3’4 567’2

The coronavirus continues to grab headlines, but market temperature on the scare has mellowed a bit Tuesday. Equity markets were firmer in a corrective fashion after yesterday’s slide.

Corn closed up 6 on the March supported by an export announcement of 124,355 mt sale to Mexico for 19/20. This, amongst a run of recent U.S. export sales. Resistance on the March contract is the 100 day at 387’4, which was tested today. Next resistance is the recent high at 394, with key resistance at the 200 day at 404’6. Support is the recent low at 375’2, then 371.

Soybeans are still under pressure from questions of Chinese demand moving forward. Questions, which are only heightened given the coronavirus and a large South American crop. The March contract continues to trend lower, but held yesterday’s low in today’s session which is support at 888’2. Next support is the 882’4. Resistance is the gap at 900, then the 200 day at 920.

March Chicago wheat finished lower, but closed above support at the 20 at 565’2 again. Next support is the 40 day at 551. Resistance is the recent high at 592’4.

Technical Thoughts – January 23, 2020

By: Ken Lake

This week the March wheat contract topped out at 592 ½ and has closed above resistance and the double top established in June at 573, on the surface considered somewhat bullish.  This move opens up the possibility of a test of the old high set in August 2018 at 636.  Simple Fibonacci retracement measurements offer us a comfortable target of 605 to advance sales, however, wheat has a problem.  Despite the fact that seeded acres in the US are century-old lows and viability of the crop in the ground is questionable we continue to fight burdensome World and US stocks which will eventually put a stop to higher values.

2019/2020 projected ending stocks for the US will be 82% of usage down significantly from the 2017/18 high of 102% but think about what that means.  When we begin harvesting the 2020 crop, 82% of last year’s crop will still be on hand!  That is not extremely bullish.

World wheat stocks are actually on the rise.  Projected 2019/2020 world wheat stocks will be a historically high 38.4%.  That is not extremely bullish.

So despite the fact that we have seen a nice rally in wheat futures values, fundamentals do not support higher values.  Producers should exercise caution.

Turning to the other grains, support in March corn is 387.  We rallied to 392 this week but failed to mount any additional strength.  USDA announced today a small corn sale to unknown destinations.  It is unlikely that the sale was to China but if it was it would be supportive.  Targets should be entered to sell 392 to 404 just in case we see a pop in the market.

The soybean market is waiting to see if China actually begins making good on its promise to buy.  So far this week, nothing.  This market is oversold and has broken all short term support values, we risk trade to 875.  Unless you need to make a short term sale, avoid sales here.

Fertilizer Update – January 6, 2020

By: John Ezinga

Thoughts in the new year by product:
The charts below represent 10 year time frames of the corn price relationship with each product.

  • Red= HOLD or caution before buying
  • Yellow = NEUTRAL
  • Green= BUY!

As you can see from the long term urea affordability index chart above it is clearly in what I call the buy zone as the price per pound of N as compared to corn is under 10%. If you need urea it would be smart to get it bought now. We are 70 bucks off the highs from last spring and seem to have found a bottom in the paper markets. I expect prices to improve from here. Although I do not expect them to rally significantly I do expect them to rebound 20-40 going into spring application season.

The chart below on 28% shows a buy signal as well. I hear there are a lot of import tons working through the system so there may be deals to be had if there is some desperation amongst the traditional holders of 28% at this time of year. In either case the price is not going to hurt you at these levels and likely will look pretty smart in the spring.

PHOSPHATE

Obviously this chart (Phosphate affordability index) is pointing to a year in which you should be clearly building your soil P levels. We are at 10 year lows and this product should be bought. I expect that like urea this product has found a bottom and will rebound so do not drag your feet to get coverage here if you need it.

POTASH

Potash is not as clear-cut as N and P. It is hovering on a neutral rating on my affordability index vs corn. I think that the Potash cartel is in control of their pricing and supply and so therefore tips the scale into a buy rating from me. If it does set back, I would expect it to be very modest.

Other products:

10-34-00
I expect flat pricing here forward with a spike right in the demand season.

AMS
We are awash in AMS…buy as you need.

SOP
If you were not aware, MAC Middleton is warehousing Sulfate of Potash and organic SOP too!! Call for pricing.

Gypsum (ag grade)
If you have gypsum in your normal spreading program you will find that prices have moved up 15-25 bucks a ton since last year. The driving culprit is the temporary closure of mines in Alabaster, MI. US Gypsum is working thru some expansion problems with the DNR and will be out of supply for the next 2 years or so. We have synthetic gyp available.

ATS
Supply should be very adequate

NH3
With lack of fall usage there should be good supply for spring application.

Contact us for specific products you would like to quote or be updated on.