The weather outlook for soybeans is still a bit supportive but even with a 5-7 million tonne drop in Brazil production, global stocks appear extremely burdensome. China imported just 16.64 million tonnes of beans from the U.S. in 2018, down almost 50% from 2017. The soybeans traded firmer yesterday, discounting Tuesday’s reports that Trump rejected an offer from the Chinese to meet with two vice-ministers this week. There were some positive comments made by Larry Kudlow and Secretary of State Pompeo, which should support. Less than ideal weather in South America with dryness in Brazil and heavy rains in Argentina are also supporting factors. The market is still in a bullish posture from a technical standpoint. Resistance comes in at 918 and 922 while support hits at 910 and 907.
If it wasn’t for the extreme bearishness coming from Soybean stocks, corn would have the fundamentals to hold a bullish tone moving forward. Both U.S. and world stocks for corn look to tighten, and a 3% below trend yield would put us at the tightest stocks/usage on record. China imported 420,000 tonnes of corn in December which was the highest for last year but still down 8% from 2017. With U.S. government shutdown still ongoing, the trade talks next week will continue to be the focus for the trade. Resistance comes in at 380 and 383 while support hits at 377 and 375.
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Soybeans Mar ’19 Daily Chart
Corn Mar ’19 Daily Chart