Charts of the Day – December 6, 2019
Afternoon Market Commentary – December 6, 2019
by: Chris Betz
|Old Crop (futures month, change, settle price)||CZ9||0’0||376’6||SF0||5’2||889’4||WZ9||0’6||524’4|
|New Crop (futures month, change, settle price)||CZ0||0’2||390’2||SX0||4’4||937’4||WN0||0’0||530’0|
Quiet day for grains while soybeans closed up a nickel on talk that China will eliminate tariffs on U.S. soybeans and pork ahead of President Trump’s December 15th deadline for a preliminary agreement to be reached. Outside markets were firmer on the positive news with the DJIA up well over 300 points.
Meanwhile trade is ignoring any concern over corn and some beans still standing in the field. The USDA’s next WASDE report is due out next week, and production adjustments lower would be warranted, but questions will remain over demand moving forward into 2020.
March corn closed lower on the week, and below the 20 day, which is resistance at 380’2. The trend remains lower with key resistance back at the 100 day at 394’6, then the 200 day at 408’0. Support is the recent low at 373, then the contract low at 373.
January beans closed just off the 23.6% fib retracement of the harvest high to low. Resistance is the 20 day at 898’4, then the 100 day at 908. Support is the recent low at 867’4, then around 855, then the contract low at 829’4.
March Chicago wheat bounced off support at the 20 and 40 day moving averages which remain support at 521. Next support is the 200 day at 508’4 then the 100 day at 504’0. Resistance is the recent high at 546.
Technical Thoughts – December 5, 2019
By: Ken Lake
Markets continue to get whipsawed by the on-again, off-again nature of trade talks but recent news seems to be leaning toward a potential solution. Having said that one must remember that political intervention into ag markets has always led to long-term demand destruction and this affair should be no difference. That negativity has the speculator playing from the short side rather than buying the market. Not a good situation for the producer. Corn basis values have stagnated and actually spot values have weakened at some processors. Soybean basis has firmed.
March corn is trading near its 20 day moving average at 380, momentum indicators are mid-range. A short term sales target would be 391 then 395. December 2020 corn made a new contract low last week at 388 and is oversold. I will remind you while sales are not advised during oversold conditions we can remain in this condition for long periods of time. There is simply a lack of positive news for the ag markets and one should expect values to remain under pressure until we get some sort of positive news. Unfortunately, expectations of good news seem to be attached to trade talks and as you know tangible progress seems allusive.
January soybeans are very oversold. Support is 859. No signal of a trend change is apparent. Wait for a test of 900 before considering advancing sales. A close above 908 would signal a move to 921. Be particularly sensitive to the Dec/Jan/Feb period for targeting sales. This is the period that South American exports begin to wain and US sales typically pick up. Target sales during that period.
The wheat market has shown strength in the past week. Support in the July 2020 contract is 526. Advance sales of new crop 2020 at 548 and 568.
Fertilizer Update – October 17, 2019
By: Emily Calderone
As we progress farther into the harvest season, the next thing on our minds is usually fall applications of Potash and phosphates, or getting nitrogen on our freshly planted wheat crop. Although I’m sure fertilizer prices aren’t as low as we wish they were (are they ever?), overall, most fertilizers actually aren’t a bad buy relative to commodity prices.
MAP and DAP are at a very favorable place right now. Prices started trending lower after fall 2018, when supply started piling up on retailers and producers when Midwest growers couldn’t get into the fields for their usual fall applications. We saw that price dropping continue all through the 2019 growing season as well – after a tough spring, many have been slightly more timid to lock in supply without seeing what yields and grain prices would be in the fall. Even with the closing of a phosphate mine in Florida, prices on dry phosphates have stayed low. If fall applications pick up, prices may start to move back up, but I would still expect them to stay lower than what we saw last fall, and are a good buy. 10-34-00 is a little bit of a tighter market and prices usually cycle along with demand – if you’re looking to secure some, prices are lower than what we see in the spring and likely won’t see any big drops through the winter as farmers start to get their orders set for spring.
Potash has been fairly quiet through the 2019 growing season. Prices were trending upward through last fall and winter, and even a little into spring, but after the “summer Potash fill program” was released and over, prices didn’t see much upward movement and eventually fell to last years lows. Potash doesn’t typically make fast or large price jumps, only about $5 per ton at a time, but with producers talking about closing mines to reduce supply and fall application season happening, I wouldn’t be surprised to see a slight uptick as fall presses on.
28% and the summer fill (or lack thereof) has been the biggest topic in fertilizer in 2019 so far. One of the largest domestic producers of liquid nitrogen limited their offered tons during the time period where most farmers and retailers stock up, and the offered prices were much higher than what were expected. Although summer may not have been the deal we hoped for, prices moving through fall are much more favorable than they were last year – last fall, 28% was upwards of $250/ton, and average pricing through the Midwest is closer to $225/ton as we enter into harvest. Urea also tells a better story, prices at New Orleans, a major port for fertilizer barges, have been dropping and domestic prices are finally starting to follow. Urea prices are also much more favorable entering fall 2019 than what they were as we trudged through 2018. Anhydrous has been kind of the odd duck as nitrogen prices have been tracking – although it is still the most cost effective option per pound of N, prices were very stagnant through most of the summer and we have finally started to see some movement as fall starts moving. While anhydrous is finally tracking down and is considered a favorable buy, it seems like many that use or store NH3 are hoping to see that downward tracking continue before locking in.
Opening Calls – December 3, 2018 at 7:12 AM
Beans are up double digits after Saturday’s announcement that the U.S. and China have reached a trade truce, and either side will not levy additional tariffs on the other. More work needs to be done to reach a firm resolution to the trade dispute, but the tone should be much more positive moving forward. Beans were up as much as 29 cents at the open of the overnight session Sunday, and currently up 16 ½ cents. Corn and wheat tagging along with corn up 4 ¼ and wheat up 5 ¼.