Grains Report - Monday, March 23

WHEAT:

General Comments: Wheat markets were higher for the week. The Coronavirus and stay at home orders in many states have created a rush of buying of Wheat products and have caught the mills short bought. They have been very active in buying Wheat in domestic cash markets, especially in the Great Plains, and basis levels have moved sharply higher. USDA on Friday announced that China had also been active in the US Wheat market and had bought its first loads of HRW since 2017. There was a lot of bullish demand news for the market to absorb. Trends turned up in US Wheat markets last week and it is possible that the buying could continue this week. No one really knows just how long the Coronavirus related buying will go on and just how short the domestic mills are. Prices will correct lower once the mill buying is done but should hold above recent contract lows as the dynamics of the market have changed. The domestic buying is one part of the puzzle and it remains dry in parts of Russia. No one is talking about losses yet, but the situation should be monitored as losses will become very possible unless it starts to rain soon.

Overnight News: The southern Great Plains should get showers and rains through Friday. Temperatures should average above normal. Northern areas should see some light snow today. Temperatures will average below normal. The Canadian Prairies should see mostly dry conditions. Temperatures should average below normal. China bought 340,000 tons of US HRW overnight.
Chart Analysis: Trends in Chicago are up with objectives of 550 and 584 May. Support is at 534, 525, and 521 May, with resistance at 549, 553, and 557 May. Trends in Kansas City are up with objectives of 476 and 502 May. Support is at 466, 456, and 448 May, with resistance at 478, 483, and 493 May. Trends in Minneapolis are up with objectives of 532 and 548 May. Support is at 519, 516, and 515 May, and resistance is at 530, 534, and 538 May.

RICE

General Comments: Rice was sharply higher and made new contract highs on Thursday before collapsing on Friday to close near the lows for the week. Futures were still higher for the week but the Friday selling seemed to indicate the end of the current bull market. Mills and speculators were early week buyers and producers and speculators were sellers on Friday. The domestic situation remains tight and sales to western countries have been generally good although not so strong in recent weeks. Some producers are selling the next crop and some significant hedge selling has been seen in new crop months in futures. Demand for US Rice remains generally positive and the export sales pace in general has been very good. The US domestic market is now quiet.
Overnight News: The Delta should get showers and storms. Temperatures should be above normal.
Chart Analysis: Trends are down with objectives of 1300 and 1237 May. Support is at 1320, 1306, and 1290 May, with resistance at 1358, 1378, and 1390 May.

CORN AND OATS

General Comments: Corn closed lower as the shock and awe tactics employed by the Saudi Arabian government hurt domestic ethanol production. Prices for Crude Oil and also gasoline and heating oil are at extremely low levels right now. The Saudis are using the cheaper price to punish Russia for balking at cutting production a few weeks ago but also to eliminate competition from shale oil producers in the US and Canada as well as bio fuels producers around the world. The Saudi moves have helped to destroy the Corn market here in the US. The loss in ethanol demand inside the US is so large that even a major purchase of US Corn by China did little to create any lasting buying interest. It has turned into a disastrous situation and one for which the US government has no real answers to give Corn producers here. The US will need to find a way to convince both sides in the dispute to back off and allow the US market to attempt to return, but so far no one is willing to listen.

Chart Analysis: Trends in Corn are mixed to down with no objectives. Support is at 332, 330, and 326 May, and resistance is at 357, 364, and 366 May. Trends in Oats are mixed to down with objectives of 237 May. Support is at 259, 252, and 248 March, and resistance is at 268, 272, and 279 May.

CANOLA AND PALM OIL

General Comments: Canola was a little lower as the US Dollar held higher but as the Canadian Dollar rallied. Trends are mixed on the daily charts. Palm Oil was higher on speculative buying and hopes that the worst of the Coronavirus news was part of the market.

Chart Analysis: Trends in Canola are mixed to up with objectives of 433.00 May. Support is at 453.00, 451.00, and 444.00 May, with resistance at 469.00, 470.00, and 473.00 May. Trends in Palm Oil are mixed. Support is at 2190, 2160, and 2130 June, with resistance at 2300, 2330, and 2370 June.