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South Central Iowa | I really don't think today was half as bad as it looked. Soybeans picked up support and held in the $10.20's. They made a new low mid morning and it picked up off a trend line at $10.19'2. There was no acceleration after that lower low, which is a good sign. The not good sign is of course that it was down nearly 30 cents at that point, but hey, it picked up buying interest to hold that area. I included some points of support on the chart I am looking at. There is another confirmation of that descending trend line at $10.17'6 and not included on the chart is the 50% Fibonacci for our entire autumn/winter move from $9.34-$10.80, which is at $10.07. The primary concern of mine is confirming that rising trend line at $10.01 if we go down. That along with the rising trend above our market creates a nice ascending channel and would help give more structure to the soybean market. Other points are listed in the chart and hopefully we don't need to worry about any of them, but break the January low and that would be a concern because that would be the first time since August/September that we made lower swings on a down move. I have two targets at trend line crosses. That top one includes a line from May 2014 and the June 2016 high and sits at $10.95-96 on February 22. The lower point is very perfect and I have mentioned it before, it sits at $9.72'6 and includes our lowest rising support that comes off of the Planting Intentions low of last year and the seasonal lows from the early autumn. That intersection is on March 29, two days before the Planting Intentions report. Not saying we see it, but that would be a wild ride from here to $10.96 by late February and down to $9.73 by the end of March...... It wouldn't be out of line with seasonalities.... Soybeans scare me sometimes.....
Corn did yeoman's work today! I have posted this chart before, but we are still in an uptrending market. Analysts keep saying it is a sideways market and that just isn't true. It couldn't even reach the lower channel line today at $3.54'0 in spite of soybeans being 30 cents down. It just picks up too much support. That channel is very reasonable, it points to $3.97-$4.26 by July, which if the high is realized is 12 cents lower than the high of July last year. We have more corn, so that makes sense. If we do break that channel line at $3.54'4 tomorrow look for support in that shallower channel at $3.49'6. After watching it today, I honestly would be surprised if it breaks it and I have an order to buy July at $3.68'4; I'm not throwing the kitchen sink at it or anything, because you never know, but this channel is 5 months old and is incredibly modest and reasonable, unlike some moves we see out of soybeans. My biggest problem with some of the lines on the corn chart is we don't have many confirmations of them, which should make me question their strength. But I believe the reason we saw corn picking up before the export announcement even, was buying in anticipation that we wouldn't reach the line. Corn is pretty sturdy in my opinion. It's not exciting, but it is more reliable.
Throwin' Bones because Centuryfarm thinks it's all voodoo. I've heard Technical Analysis compared to reading tea leaves and hocus pocus before, and I would never put everything on it. That is why I only like Soybeans and Corn. I feel, like many of you, that I do understand our market in a fundamental way. So some fundamental points, the Jan 12 report included Brazil and Argentina production at 104 mmt and 57 mmt respectively; 161 mmt total. The grain exchange in Argentina came out with a 52.5-53.5 mmt estimate last week and most analysts are putting Brazil in that 103-105 area; so a total of 155.5-158.5 mmt, 2.5-5.5 mmt less than the Wasde, 90-200 million bushels. The number that demanded our soybean prices to be $1.30 higher than 2015 was production of 153.3 mmt. Soybean consumption is projected by the same Wasde to be 15 mmt higher in the 16-17 year vs the 15-16 year, which was 14 mmt higher than the preceding 14-15 year. So an increase of 3 mmt out of our biggest competitors in SA and an increased usage of 15 mmt. Our increase in production from 15 to 16 was a shade over 10 mmt. So we are likely looking at 2 mmt shortfall and that is not even getting into the increased global consumption of 10-15 mmt for the 17-18 year. Our export pace when seasonally adjusted shows that we are 140 million bushels over the USDA projection. If that continues to be the case, we could look at our carryout falling to 280 million bushel in Wasde's over the coming months. I keep hearing analysts say we are front loading, front loading, front loading... What if we aren't? What if this is just the global increase in consumption? I see an export inspection like the one this morning and see the pace we are on, and I start to think soybeans don't have a balance sheet issue, especially without perfect South American production. A lot of people have varying views on the soybean S&D, but I for one don't read them as that bearish, and I don't think the market does either. And to add, we probably aren't adding 6 million acres of production without a higher price than this.
Corn fundamentals are easier! We have a lot of corn! Don't expect that market to get excited. But like I said, we have a very reasonable channel that points to $3.97-$4.26 this summer. We will get a weather run, but like last year, if nothing materializes, expect it to evaporate quickly.
Trump. The wild card. Think about it, the guy wants to increase exports, so why would that be bad for us. Trade war? Well he needs congress to go along with the punitive taxes and he is not going to get that. Also, the media tries to instill fear about him because they don't like him. They have been very angry that the market has gone up since his election. That is not a biased thought, it is an objective observation. They hate the guy and Republicans in general. They cheerlead an economic collapse so they can blame them. Don't let their cheerleading of doom cloud the truth that there are people who realize destroying trade is not how you make America Great and that these bluffs are a Trump negotiating tactic. I really don't want to get into politics, but a spade needs to be called a spade, and it is pretty obvious that the media will exaggerate and attempt to exacerbate any thing they can when it comes to Trump. But when the smoke clears, I think, both us and the markets will understand that there are good opportunities and it is not the end of the world. Just like that Poseidon Adventure song, "There has to be a morning after!" https://www.youtube.com/watch?v=Mm41npkt6Xw LMAO!!!
Good Luck Everyone!
Edited by Conan the Farmer 1/30/2017 17:53
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Throwin' Bones! Soy and Corn
