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Early Call 8:45am EST: Corn up $.02, soybeans up $.08, wheat up $.04. As a massive

winter storm swirls and blows across the U.S. southern Plains and Midwest, the grain

and oilseed complex traded higher overnight. Soybeans led the way with contracts

sitting at or near session highs early Monday morning. Wheat markets were also higher,

with Chicago (SRW) taking the lead, while corn also tried to rally. As for the shutdown

of the U.S. federal government, the U.S. dollar was weaker overnight and DJIA futures

were showing losses. The shutdown will lead to the absence of daily/weekly, USDA

data such as export sales/shipments and daily livestock information.

Grains: Corn and soybean futures rose Friday, boosted by stronger-than-expected

export sales. The USDA said Friday morning that exporters sold 1.89mmt of corn and

1.53mmt of soybeans in the week ended Jan. 11. Those were both above the range of

pre-report analyst estimates. The sales report sparked buying interest among traders

concerned about underwhelming exports through much of this crop season, particularly

in the soybean market. Analysts cautioned that they weren't enough to end that longer-

term trend, however. Demand has been sluggish recently, so these numbers were

welcomed by the bull crowd. To see one big week of sales is not that surprising and not

enough to reverse the current market trend. March-dated corn futures rose 0.3% to $3.52

1/2 a bushel at the Chicago Board of Trade, while March soybean contracts rose 0.4% to

$9.77 1/4 a bushel. Chart signals suggesting to some traders that prices were headed

higher added to the momentum. Wheat futures slid on Friday after export sales for that

grain fell below expectations. Exporters sold 190,600mt of wheat in the week ended

Jan. 11, less than the minimum 250,000mt estimated by analysts. CBOT March wheat

futures fell 0.6% to $4.22 3/4 a bushel. Dry weather in Argentina added to buying

interest in corn and soybean markets. Commodity Weather Group said that parts of

Argentina's crop belt are likely to dry out going into February, due to limited rainfall.

Currently the lack of rainfall was stressing around 10% of the country's corn and

soybean crops, the group said.

Daily Grain / Hogs Marketing Outlook Written by: Jim Gerlach

1/22/2018

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Weekend showers aided southern Brazil, but still short-changed many areas near the

Uruguay border. Northeast Brazil (about 20% of the belt) is seeing reduced yield

potential, but rains will ease dryness next week. The central quarter of Brazil remains

unfavorably wet this week before drying out next week. Mato Grosso fieldwork looks to

slow in the 6-15 day period due to rain. Occasional showers will be limited to northern

and far western Argentina (main belt central/south) the next 10 days and dry again in the

11-15 day period, with 90s limited until early Feb. Rains deficits rebuild for at least ¼

of Argentina this week and expand further in early Feb for the southeast ½ of the belt.

Stress slowly rebuilds as a result, increasing the need for 16-30 day relief. In the U.S.,

snow in the central Plains benefit 15% of the belt, with a drier pattern over the balance

of the next two weeks. Winterkill risks increase late in the 11-15 day period.

Delta/Midwest rains the next two days will benefit SRW wheat.

Argentina’s early corn crop was rated at 12% good/excellent and 44.9% poor/very poor

by the Buenos Aires Grain Exchange, compared to last year’s 33.4% good/excellent and

32.7% poor/very poor at this time. The exchange rated soybean conditions in Argentina

at 37.3% good/excellent vs. last year’s 52.6%. Argentine crop ratings have only been

around for a couple of years and there is no way to model their relationship to yield, but

the poor ratings confirm private assessments and argue in favor of a 15-20% Argentine

corn yield decline without a rapid improvement in weather conditions. A 15-20% yield

reduction would cut Argentine corn production 6-10mmt. The soybean harvest in Brazil

has totaled 0.8% for far, according to consultancy AgRural, compared to the average of

1.2% and last year’s 2.2%. Mato Grosso’s state agency IMEA pegged the safrinha corn

planting progress in Mato Grosso at 1.5 % complete vs. almost 5 % last year. A

respected, Memphis-based analytical firm says Brazil’s soy crop will likely be 112mmt

or better, while it’s still too early to trim the Argentine soy crop below 52mmt (USDA

56mmt). A large, Argentine old crop soy carryover will mitigate the impact of a lower

2018 crop. Wheat futures are drawing support from less than ideal weather in the U.S.

HRW belt, but also growing concerns in the FSU. The cold is intensifying in the Black

Sea area and temperatures could drop below -15 degrees Celsius, with some models

planning a decrease until -20 degrees Celsius in some areas of central Ukraine on

Tuesday and Wednesday. Special attention will still be brought to the center of Russia,

where the snow depth is still considered insufficient to ensure homogeneous protection

in case of virulent and prolonged cold. That said, Ukraine saw heavy snowfalls over the

weekend. World wheat stocks outside China, a figure particularly sensitive for prices,

could end 2018-19 at their tightest in 11 years, the International Grains Council said,

expanding on forecasts of a fall in output ahead.

While equities struggled to start the week, as investors mulled over the implications of

the U.S. government shutdown, ags got off to a strong start, with the need for rains for

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Argentine corn and soybean crops a primary theme. Weather service WxRisk.com said,

“The rains over the weekend clearly underperformed in Argentina and did not meet

forecasts expectations at all. On top of that, the models on Sunday afternoon and

evening are significantly drier than what they were showing on Friday.” Commodity

Weather Group said that while rains over the past 10 days have done much to limit crop

stress to perhaps only 10% of Argentina’s growing belt, drier weather is seen returning

to the country to end January. And rain will prove limited further ahead too, allowing

“further expansion” in the at-risk area “to at least half of the belt by mid-February”. Nor

was Argentina the only South American country to provide support to soybean prices,

with Brazil doing its bit, through a slow start to its soybean harvest in part a knock-on

effect of a delayed sowing season. According to analytical firm AgRural, less than 1%

of Brazil’s soybean crop was harvested as of Friday, down from 2.2% last year and

1.2% for the five-year average. AgRural estimates that Brazil could harvest 6.5mmt of

soybeans this month, down from 11.4mmt collected in January last year, and implying

extra interest for now by importers in readily available U.S. supplies. Meanwhile, a

strengthening real is helping prices too, in cutting the dollar value of prices in Brazil.

The real has firmed 3.9% since the start of the year, trading at 3.195 real to the dollar.

On current exchange rate, July soybean futures in Brazil are equivalent of $10.19, which

is down about a $1 from peak in December. And all this when hedge funds have been

ramping up short bets on soybeans.

The key Jan USDA reports have

come and gone, now one week

behind us now and corn, beans

and wheat have all survived and

managed to push off of

recent/contract lows. New sellers

have been absent and fund

managers, who remain loaded up

on the short side, have chosen to

lighten their exposure as

northeastern Argentina struggles

to get the last of their crop

planted. Corn futures passed a

couple of technical milestones last

week. The spot March contract

not only closed ahead of the

psychologically-important $3.50

mark, it also finished back above its 50-day moving average for the first time since

October and only the second time since July. Finally, as noted in the attached chart, at a

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lowly 32% reflecting 201,000 Managed Money long positions reportable to the CFTC

versus a whopping 424,000 shorts, this indicator is currently at levels that have warned

of and accompanied every significant reversal over the past 2-1/2 years. Does this open

the door to higher prices and an end to the gentle decline and low volatility that has

typified the market for the past five months? It’s a little early to make that call. Nearby

futures would need to first pass $3.55, and then more significant resistance at $3.65.

Beans have also shown some life, with the nearby March contract challenging the 200-

day moving average near $9.79, and Nov futures briefly pushing above the $10.00

threshold. It’s a start! While these could be the early signs of shifting sentiment in the

complex, the fundamental argument towards sustaining upward price momentum in

corn and soybeans remains a weak one (too much supply, even with a few problems in

South America). We see the argument as more one of how cheap is cheap enough? We

may have found that spot for now. That said, now is not the time to pull offers above the

market. If the trade gives us a bone, let’s take it!

On the demand front, Malaysian palm oil price futures reversed last week's losses to end

Monday's trading session 1.3% stronger on a stable price outlook at an industry

conference in Karachi. Palm oil prices in Malaysia could rise in the first quarter of 2018

as production is expected to drop, analysts at the conference said. Export estimates for

palm oil for Jan. 1-20 fell 16.7% and 13.9%, according to separate estimates by Intertek

Agri Services and SGS (Malaysia) Bhd. Palm oil spot prices out of Rotterdam will rise

to $750/mt by June 2018 from $680 as palm oil looks oversold and demand is at record

levels, says Dorab Mistry, a leading industry analyst. The meal market is nervous over a

slower Argentine crush rate. Trade publication Oil World says the increase in world

oilseed crushings slowed in Oct/Dec 2017 and will probably only show a below-average

rise in Jan/March 2018 because of ample availability of palm oil. Furthermore, the

market's dependence on soymeal will increase in coming months because of tightening

supplies of distillers dried grains, sunflower meal and fish meal. Finally, they see

Chinese 2017/18 soybean imports at 96mmt vs. 97mmt forecast by the USDA and

93.5mmt prior year. Ice is clogging major U.S. waterways, slowing the flow of crops

out of the agricultural heartland and lowering prices for farmers. Bouts of frigid

temperatures in the Midwest froze portions of the Mississippi, Illinois and Ohio rivers in

recent weeks. That's prompted some grain and soybean shippers to lower prices offered

as they contend with reduced capacity, while other facilities have closed altogether. The

USDA says that grain barge tonnage on those rivers in the first two weeks of January

fell 63% from the previous year. Iraq, in the midst of a second consecutive drought year,

may have to boost grain imports after insufficient rain damaged as much as 1mmt of this

year’s wheat and barley crops, an agriculture ministry official said. British production of

animal feed is surging, helping drive a jump in corn imports. The U.K. shipped in about

880,000mt of corn from July through November, the most in records going back to

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1992, customs data showed. Imports have increased over the past seven years to keep up

with demand for locally raised livestock.

Hedge funds added to bets

that grain and oilseed prices

would fall, according to the

most recent CFTC data.

Money managers extended

their net short positions in

corn, wheat and soybean

markets in the week ended Jan. 16. They climbed above 100,000 short contracts in

oilseed futures and options for the first time since last summer, a gain of 11% from the

previous week. Aggregate managed money positions in wheat, corn, soybean, soymeal

and soyoil were net short 471,000 contracts vs. 417,000 net short last week. The

managed fund corn short swelled 4,000 contracts to 227,000 contracts, the soy short

increased 11,000 contracts to 103,000 contracts, the wheat short swelled 14,000 to

143,000 contracts, the soybean oil long shifted to short 6,000 contracts after selling

18,000 contracts, while the meal long shrunk 8,000 contracts to 8,000. The current net

short position in the 5 major ag markets by managed funds is the largest since May

2017. The soybean short was larger than expected.

Over the past three years, farmers have watched as some of the world's largest suppliers

of seeds, pesticides and fertilizers have merged, raising concerns that competition could

suffer and prices for farm supplies could rise. After the close Friday came a report that

the ABCD’s of the grain business soon become ACD’s. Archer Daniels Midland Co.

has made a takeover approach to Bunge Ltd., according to people familiar with the

matter, setting up a possible bidding war after Glencore PLC earlier made an overture to

the agricultural powerhouse. Details of the ADM approach are unclear, and it is possible

neither company would succeed in buying Bunge, which had a market value of about

$9.8 billion as of Friday afternoon. ADM's valuation was $22.6 billion. Bunge shares

were up 11% at 4 p.m. Friday after The Wall Street Journal reported the approach.

ADM and Bunge represent the "A" and "B" in the so-called ABCDs, the global

commodity-trading companies that dominate the world-wide flow of basic foodstuffs.

Minnesota-based Cargill Inc. and Louis Dreyfus Commodities, with its headquarters in

the Netherlands, are the other two. An ADM-Bunge combination would likely face stiff

regulatory hurdles, given the companies' competing grain facilities, shipping terminals

and processing plants. Glencore's agricultural division has a smaller presence than

ADM's and Bunge's in key crop-exporting bread baskets like the U.S. and Brazil, so a

Glencore deal could face fewer such hurdles.

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Hogs: Cash hogs are called to open steady, but it remains to be seen how the winter

storm will impact country movement. Between early-year holidays and bitter cold

temperatures, it has been very difficult to assess real market supplies and currentness so

far in 2018. It looks like this week may be yet another disrupted schedule, further

perplexing that assessment. Processing margins look acceptable yet have certainly

narrowed from late 2017. The national bid lost $.35 to close at $69.36 on Friday, with

the IA/MN bid down $.36 at $69.52. The CME Lean Hog Index was up $.56 on January

17 at $73.55. The USDA pork carcass cutout value was up $.77 at $81.44 on slow

movement of 225 loads. The ham and belly primals were the only cuts reported higher.

Weekly kill was up 0.99% vs. last year, with pork production up 0.3% as packers have

slowed kill on eroding margins. Estimated packer margins were $18.32/head for non-

integrators and $42.80/head for integrators vs. $18.25 and $41.72 the previous day.

Meatpackers killed fewer hogs, slowing their recent record slaughter rate as they try to

bolster margins. Recent factors like cold temperatures--an impediment to hog weight

gains--forced packers to pay more to secure supply for their plants, eating into their

profits. As a result, they eased off the accelerator last week and bought fewer pigs. The

strategy is yielding fruit, for now: Their margins have risen since Tuesday, according to

calculations by The Wall Street Journal.

Lean hog futures should open higher, boosted by the premium of the cash index and

firming carcass value. Hog futures ended Friday lower. CME February lean hog

contracts fell 1.3% to 72.075 cents a pound. The fact the spot February lean futures have

slipped more than $1 below the cash index may indicate a lack of trade confidence

relative to further cash strength in the immediate future. Physical hog prices have cooled

this week. Prices were steady on Wednesday and Thursday, and were expected steady to

lower again on Friday. Analysts say packers have eased off the rate of hog slaughter in

order to help rebuild their margins. That's weighed on the futures market, which gave

back most of its gains for the week. For the week ending Jan. 16, net pork export sales

surged to 26,400mt. At the same time, actual pork exports totaled a respectable

21,200mt. The federal government shutdown isn't likely to slow the projected record

99.7 billion pounds of meat expected to roll out of U.S. processing plants this year.

USDA inspectors evaluating meat and egg products for safety are considered essential

personnel, according to the agency, which will keep meat products flowing both to

domestic grocery stores, burger joints and prison cafeterias, as well as export markets.

That also goes for inspections required for emergency recalls, the USDA says.

Cattle futures slid Friday, ending a multiday winning streak as traders waited for cash

trades to guide the market. Contracts for live cattle rose for five consecutive days,

before sliding on Friday. Futures traders had anticipated that the week's cash, or

physical cattle, trade would trend higher this week. But few sales had taken place by the

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end of Friday's session, as meatpackers and feed yards faced off over prices. Packers

were bidding around $118 on a live basis, which would be around $2 lower than last

week, while feed yards were asking for as much as $124 and $125, market observers

said. Sporadic trades took place earlier in the week, including around 400 head of cattle

sold in the western Corn Belt at $121, according to the USDA. That was higher than last

week's average. The futures rally lost steam, however, on the lack of cash trading

volume. Observers said the bulk of trade would likely come later in the afternoon or

evening. February-dated live cattle futures at the Chicago Mercantile Exchange closed

slightly lower at $1.219 a pound, while later-month contracts fell further. Wholesale

beef prices have fallen through most of this week on lukewarm demand.

Weather: The U.S. and European models are in good agreement days 6-7, fair-good

agreement days 8-10. The large-scale pattern will feature a low to moderate amplitude

jet stream with embedded disturbances across the U.S. These systems will be fast

moving, limiting precipitation in the central U.S., especially west of the Mississippi

River. No significant cold weather is indicated as the low amplitude flow promotes

more moderate, Pacific flow. A major blocking ridge expected to be between Siberia

and Alaska during the 6-10 day period bears watching as there are signs it could shift

further to the east during the 10-15 day period, promoting much colder weather in

Canada and the U.S. as Pacific flow becomes blocked from entering North America.

Global Weather Highlights: Limited rainfall and near to above normal temperatures in

Argentina decreases soil moisture and increases stress on developing corn and soybeans,

especially pollinating corn at this time. This situation bears watching. Favorable

conditions continue for developing soybeans in southern Brazil. Drier weather in central

Brazil favors maturing soybeans and the early harvest. However, it does deplete soil

moisture for filling soybeans. More rain is needed to support developing corn in South

Africa. Some beneficial rain is expected during the next 7 days.

North American Weather Highlights: Moderate to heavy snow in the northwest Midwest

will impact transportation. There is no significant cold weather indicated during the next

7-10 days. The central/southern Plains will see mostly dry weather continue, with no

significant precipitation in sight. No damaging cold weather is indicated during the next

10 days.

Dry weather dominated the majority of the Argentine growing regions over the

weekend, with totals of .20-.60” falling in far northern sections of Santa Fe, Entre Rios

and most of Corrientes. Totals of 1-2” fell across RGDS, Santa Catarina and Parana late

in the weekend, with totals of .10-.50”, isolated to 1”+, falling across around 60% of the

Brazilian growing regions north of Parana. Temps were in the 80’s and 90’s in both the

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Argentine and Brazilian growing regions over the weekend. Limited rains look to fall

across the most of the Argentine growing regions through most of this week, with heavy

totals to fall in the far northern states of Corrientes and Formosa. The 6-10 day period

also sees rains to be fairly limited across the majority of the Argentine growing regions.

Close to average rains are seen for most of the Brazilian growing regions in the next 7-

10 days. Temps look to run average to below in most of the S. American growing areas

in the next 5 days and then near average in the 6-10 day period.

Dry weather dominated the majority of the Plains and Midwest through early Sunday

and then snows developed in eastern CO into western NE, central SD and far NW KS.

Totals from that activity have been in the 6-12”+ range. Things were mainly dry in the

rest of the Plains Sunday. Rains moved into MO and southern IA, with snows in NW IA

and southern MN overnight. Totals have not yet been reported with that activity. Temps

were well above average, with highs in the 60’s and even some 70’s in the southern

Plains, with 40’s and 50’s in the Midwest. Lows were in the 20’s in the southern Plains,

with teens and 20’s in the Midwest. The area of low pressure that has brought heavy

snows to the western Plains will finish up in the Plains this morning and go on to

produce 6-12”+ totals to the southern 1/3rd of MN, NW ¼ of IA and northern ½ of WI.

Rains of .20-.60” will fall in the rest of the Midwest in the next 24-36 hours. Things will

then quiet down for the middle of the week, with another system to bypass the Plains

and NW Midwest with its precip but bring some light to moderate rains to the SE ½ of

the Midwest late this week or weekend. Temps will be running above average across the

Plains and Midwest for most of this week, with readings to fall briefly to near average in

the Midwest for the weekend and then readings to bounce back to above average. No

damaging cold is seen in winter wheat areas.

Macros: The macro markets were quietly lower as of 8:15am EST, with Dow futures

down 0.2%, the U.S. dollar index is down 0.1%, crude oil is down 0.2% and gold is

unchanged. The S&P 500 on Friday moved up to a new record high and closed 0.44%

higher. The DJIA gained 0.21% and the Nasdaq gained 0.34%. Bullish factors included

signs the global economy is picking up steam after the German government raised its

German 2018 GDP forecast to 2.3% from a prior forecast of 1.9%, and upbeat

comments from Cleveland Fed President Mester, who said the U.S. economy started

2018 with "positive momentum." The U.S. markets this week will focus on the partial

U.S. government shutdown that began last Friday night, whether U.S. interest rates

continue to rise as the 10-year T-note yield last Friday rose to a new 3-1/4 year high of

2.66%, anticipation of next week's FOMC meeting where there is a low probability of a

rate hike, Q4 earnings season with 81 S&P earnings reports this week, the Treasury's

sale of $103 billion of T-notes, the U.S. economic calendar that includes several

housing reports and Friday's Q4 GDP report (expected 3.0%), and any news out of this

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week's Davos meeting, which President

Trump plans to attend. In Europe, the

markets will be relieved today that the

German Social Democratic Party (SPD)

on Sunday voted to begin formal

coalition talks with Chancellor Merkel's

CDU bloc, which eliminated the near-

term possibility of a snap German

election. In Asia, the focus will mainly

be on the Bank of Japan meeting on

Mon/Tue. The market is expecting the

BOJ to leave its policy unchanged but

will be watching for any hint of a move

towards a less accommodative policy. The Japanese stock market remains strong with

the Nikkei index last Thursday rallying to a new 26-year high. In China, the focus is on

the stock market where the Shanghai Composite index last Friday rallied to a new 2-

year high and closed the week with a solid gain of 1.72%.

The U.S. government partially shut down at midnight last Friday after the Senate was

unable to pass the short-term continuing resolution passed by the House. The markets

are not likely to be overly concerned about a short shut-down, which will have little

macroeconomic impact. However, the markets are likely to grow increasingly

concerned if the shutdown lasts into next week. Even if a short-term CR is approved

through February, Washington will simply be back in the same boat when that CR

expires. The markets must therefore be prepared for a period of uncertainty until

Congress can finally agree on a spending bill that lasts for the remainder of the fiscal

year (ending Sep 30). As long as Congress limps from one CR to another, the CR can be

used as leverage for DACA, border wall funding, and other issues.

Overnight, Bloomberg News reported that the dollar declined and Treasuries halted a

recent selloff as investors assessed the impact of the U.S. government’s partial

shutdown. European and Asian equities were mixed. The greenback edged lower

against most major currencies as the disruption to federal services dragged into a third

day. The euro climbed on optimism that German Chancellor Angela Merkel has made a

potential breakthrough toward a fourth term. Traders monitored China’s appetite for a

stronger currency as the yuan touched the symbolically key level of 6.4 per dollar.

South Africa’s rand rose to its highest since 2015 on speculation President Jacob Zuma

may be forced to leave office. U.S. stock futures fell. Equity investors appear to have

taken the latest U.S. government drama in their stride as the optimism over economic

growth and profit increases that pushed many stock indexes to all-time highs lingers.

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Meanwhile, the next catalyst for bonds may come from commentary by policy makers

after European and Japanese central bank decisions this week. Their signals that

unprecedented stimulus will soon be wound back has sparked a surge in yields this

month. Elsewhere, West Texas oil edged lower, reversing earlier gains made after

OPEC and Russia said output cuts will continue until the end of the year.

The Stoxx Europe 600 Index increased 0.1 percent as of 7:05 a.m. New York time to the

highest in more than two years. The MSCI World Index of developed countries jumped

0.1 percent to the highest on record. The MSCI Asia Pacific Index increased 0.2 percent

to the highest on record. Japan’s Nikkei 225 Stock Average advanced less than 0.05

percent. The MSCI Emerging Market Index rose 0.4 percent with its seventh consecutive

advance. The U.K.’s FTSE 100 Index climbed less than 0.05 percent. Futures on the

S&P 500 Index declined 0.1 percent. The Bloomberg Dollar Spot Index decreased 0.2

percent to the lowest in about three years. The euro increased 0.3 percent to $1.2255.

The British pound gained 0.4 percent to $1.3907, the strongest in 19 months. The

Japanese yen advanced less than 0.05 percent to 110.72 per dollar. The yield on 10-

year Treasuries declined one basis point to 2.65 percent, the biggest drop in more than

a week. Germany’s 10-year yield advanced two basis points to 0.58 percent, the highest

in a week on the largest rise in more than a week. Britain’s 10-year yield advanced

three basis points to 1.364 percent, the highest in more than 12 weeks on the biggest

gain in more than a week. West Texas Intermediate crude decreased 0.1 percent to

$63.28 a barrel, the lowest in almost two weeks. Gold advanced 0.1 percent to

$1,333.19 an ounce.

Summary: For the week, corn was up $.06 ¼, soybeans were up $.16 ¾, CBOT wheat

was up $.02 ¼, meal was up $14.50 and soybean oil was down 85 points. The CRB

index was down 1 last week to 451, with crude oil down $1 on the week at

$63.00/barrel. Gold was up $11/oz on the week to $1,332, while the dollar index

declined 145 points to 90.40 (a three year low). The S&P closed up 0.9% on the week to

a new all-time high. The corn market traded marginally higher Friday, supported by

strong export sales, technical buying and short covering. Export sales were reported at

1,888,300mt, way above estimates between 500,000-800-000mt and above sales last

week of 437,745mt. Drought and armyworms have attacked the corn crop in Malawi

and officials are currently trying to analyze the overall damage to the crop. In central

Brazil, corn and soy areas have a slight chance for wetter weather in the 6-10 day

forecast. Already a wet area of the country, central Brazil is experiencing disruptions to

early bean harvest. Planting of Brazil’s safrina corn crop is running behind last year’s

pace as only 0.8% of the crop is planted as of today compared to 2.8% this time last

year. South American weather continued to support soybeans as March soybeans.

Soybean export sales were reported at 1,240,200mt, above estimates between 600,000-

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1,000,000mt and above last week’s sales of 607,381mt. Meal export sales were

282,000mt, at the top end of estimates and above last week’s sales of 209,313mt. Soyoil

was also above estimates of 8,000-25,000mt at 28,000mt, both were factors that gave

additional support to soybeans. First looks at Brazil soybean yields and production

indicate as expected or better than expected yields, as soybean harvest gets underway in

the northern areas of Mato Grosso. However, soybean harvest in Brazil lags behind last

year’s pace and the 5-year average at 3.29% harvested area vs. 11.49% last year and

7.17% 5-year average, leaving plenty of area to find potential problems. Weather in

Argentina, which drives the meal market and as a result takes soybeans higher as well,

remains dry the next 10 days. Profit-taking and technical selling took their toll on the

market, pressuring wheat lower as we received a third week of poor export sales reports.

Export sales for wheat were reported at 153,000mt, below estimates at 200,000-

500,000mt and compared to sales last week of 71,463mt. The Euro, which hit 3 year

highs vs. the dollar last week, has broadened EU exporters’ struggles to compete in the

world market this week. March wheat bumped up against resistance levels overnight

trading a high of 4.27 ¼. After another week of disappointing export sales, it traded

down the rest of the day and traded a low of 4.21 ½. In southern Australia, wheat and

canola harvests seem to be wrapping up, with no additional problems on the horizon.

March corn closed little changed in a consolidative session on Friday. The near-term

trend is neutral-positive, but March corn has stalled ahead of chart resistance at $3.54

3/4, the Jan. 3 high. Heading into this week, the $3.54 3/4-$3.54 ceiling remains a key

hurdle for corn bulls, and that is the level that would need to fall to open the door to a

fresh rally phase. Beyond there, a major bullish corn target lies at $3.60 1/2, the Dec. 4

daily high. March corn is trading above its 10-day, and 20-day moving averages, which

is a positive near-term trend signal. However, momentum is flagging around the 50%

zone. The 14-day relative strength index reveals momentum at 54% on Friday. The corn

contract is at a critical technical test. If corn bulls attract fresh momentum it would open

the door to a new rally wave. However, if that ceiling holds firm, corn will become

vulnerable to downside testing. The 20-day moving average is support. March soybeans

erased the majority of intraday gains Friday to close marginally higher, but in the lower

third of its daily range. The action formed a bearish shooting star on the daily

candlestick chart. March bean bulls propelled the contract through resistance at $9.77,

the Jan. 5 high, but sellers used the pop to $9.82 3/4 as a selling spot, which roughly

corresponds to the 40-day moving average. For now, bean bulls remain on the

defensive. The $9.77-$9.82 3/4 area along with the 40-day moving average is a key

hurdle for March beans and is the zone the bulls would need to conquer to keep the

focus on higher price points. The minor bean trend remains positive, but Friday's action

is worrisome for bulls. The 20-day moving average is support.

12

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