Markets Tread Water as Attention Shifts to Iowa and Biofuels

Turnaround Tuesday turned in a boring choppy, two-sided performance with corn and wheat finishing slightly lower while beans tested overhead technical resistance before stalling. Today’s news story that could move the markets is a speech by President Trump in Iowa where the bio-fuel bulls and the national farmer groups need to hear a positive demand plan since year-round E-15 ethanol has been relegated to a committee which means nothing will happen anytime soon. Prices have found a short-term equilibrium since the report, so an uneventful daily trade is the outlook if President Trump offers no insight into increasing domestic demand.

News and Notes:

• Argentina’s weather forecast for needed rain next week remains consistent for the last several days and Brazil’s overall outlook is favorable. The US will begin to thaw out into the weekend before another brief arctic chill will hit over the weekend. Early February forecasts are for a return to normal temperatures and precipitation.
• The daily March corn chart is on Page 2 and shows the new post-report lower range from $4.20-$4.30 which has attracted even more world buying. There is currently too much old crop corn evenly spread out over the world for prices to rally more than 10-15-cents, but the world buyers have determined that $4.20 March futures is a value level for purchases. Corn, other than report day surprises, has been largely choppy and range-bound for months and that pattern should continue until more is known about US planted acreage intentions.
• The morning flash export sales announcements have been slowing as China is done buying US beans while normal business corn exports totals are being done. US corn exports have a good seasonal window into Argentina’s harvest, especially at the lower price levels.
• Please take a few minutes to listen to the latest Helena FieldLink podcast with information on developing a smarter fertilizer strategy this year and an overview of the January USDA report.

The overnight trade will be largely influenced by President Trump’s speech in Iowa this afternoon. A copy of the speech has not been released, so no one knows if E-15, SAF or any bio-fuels will be addressed as a bribe for votes in the mid-term election in November. Other news is stale or lacking as Brazil and Argentina’s weather has turned non-threatening and early bean harvest in Brazil is showing the expected big yields. Export demand for corn is has been the most consistent bullish story, so those exports need to continue, but international buyers have been most active when spot futures have traded between $4.20 and $4.25. If you have completed your tax selling and raising cash for pre-pay expenses and rent, keep an eye on strong basis offers as the winter storm and normally slow late January delivery schedule should force some buyers to offer much improved basis.