Soybeans Sharply Lower as Wheat is Higher

MORNING OUTLOOK

Grains are mixed. SH is down 9 cents and near 14.07. Overnight low was 13.85. SMH is near 459.8. BOH is near 41.16. CH is up 2 cents and near 5.33. WH is up 15 cents and near 6.90. KWH is up 12 cents and near 6.55. US stocks are higher. US Dollar is lower. Crude is slightly higher. Gold is higher. Inauguration Wednesday.

Soybean prices fell overnight on concern over future China demand. Virus outbreak in Hebei province triggered a severe lockdown. China 2020 hog production was down 3 pct. Hog slaughter was also down 3 pct at 411 million. Dec hog herd though is up 10 pct from Sep at 406 million. Matto Grosso seed disease could lower Brazil production. Most look for Brazil and Argentina production to be down 5-9 mmt rom USDA 181. Asian vegoil markets were lower.

Most feel US soybean demand could be 50 mil bu higher than USDA latest guess. Demand could even be higher but US carryout will be near the bottom of the bin. Brazil. Brazil truckers are threatening a strike Feb 1 due to higher fuel cost and lower freight rates. Some still feel US domestic cash prices could test either 2013 high near 13.00 or 2012 high near 14.40 versus USDA est of 11.15. This could suggest first objective of nearby soybean futures could be 15.30 then 16.30.

Russia announced a $1.65 export tax on wheat exports after March 1. Russia fob wheat prices tested $300 or 8.20. This could suggest as much as 5-7 mmt of Russia export demand may have to be shifted to other origins. This could also suggest nearby Chicago wheat futures could test 7.50. Matif wheat futures made new highs.

China wheat futures up $25 in 3 days despite China selling 3.9 mmr from reserve at prices $27 above last week.

Most look for US 2020/21 corn demand 400-500 mil bu more that USDA latest guess. This could drop the carryout closer to 1,100 versus USDA 1,552. Most feel nearby corn futures could test 5.70-6.00 as 8-10 mmt of World demand shifts from South America to other origins. Argentina is talking about a corn export tax. Ukraine will meet Jan 25 to talk about restricting corn exports.  Russia is also talking of a corn export tax.

On Friday, Managed funds were net buyers of 2,000 SRW Wheat; sold 10,000 Corn; 12,000 Soybeans; 1,000 lots of Soymeal, and; 12,000 lots of Soyoil. We estimate Managed Money net long 23,000 contracts of SRW Wheat; long 414,000 Corn; net long 164,000 Soybeans; net long 84,000 lots of Soymeal, and; long 85,000 Soyoil.

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