Short week as we start things on Tuesday with what normally is our Monday weekly export inspection report - a gauge of near-term demand.
Wheat inspected by the U.S.D.A. for near-term export was 9.3 million bushels, down from 12.3 m.b. the week prior, and four-week average of 11 m.b. More numbers reflecting our weak-demand scenario, I expect to last until late March or early April, when seasonal exports for June on out new-crop deliveries begin.
Corn inspections were 30.3 m.b. up 6 m.b. from the week prior, 3 m.b. over a year ago and 9 m.b. over our four-week average. Additionally, corn inspections are now 9 m.b. over a year ago on exports for the marketing year on corn that began September 1.
Soybeans inspected for near-term export were 44.5 m.b., versus 46.8 m.b. last week, 37m.b. a year ago, and four-week average of 39 m.b. Of the 44 m.b. China was in for, 20 m.b. of the total with very aggressive buying by outside countries like Turkey, Netherlands, Mexico and Costa Rica, to mention a few. China is the primary world-player the trade watches near-term, but in the big picture, it's not just China who needs high-protein crops, but the world is looking for more protein in their diet. In conclusion, demand on the week from this report is bearish wheat, friendly corn and bullish beans.
The seasonal downturn in grains continued this week as grains follow the lower crude oil as crude adjusts lower in the dead of winter, as driving slows and cars sit in the garage as snow falls across 60% of the nation, but don't go to sleep on seasonals as crude turns up in March in preparation for the early spring summer driving and consumption season. The dollar's strength, as always, is opposite of crude, lending psychology that U.S. grains become more expensive on the exchange rate. As I harped on my weekly report last week, you cannot be a bull or a bear the next six weeks until March 1, but come in each day with charts in hand and trade based on what these three issues tell you: weather in South America, crude oil; and, the dollar index. Crude down and dollar up, grains lower. The reverse, and grains higher - with a weather problem in South America arising being the wild card to the market turning and trading emotion. After March 1, the grain mind-set turns bullish on, 1) the uncertainty of the early March monthly crop report, which adjusts our 2009 production again; and, 2) the fear of what to March 30-planted-acres intention report will say.
No sign of any slow-down in Chinese demand for U.S. beans. This week's inspection report was over a year ago and our four-week average, with our first two weekly export sales reports being higher than the first two weekly reports in 2009 and 2008. So, demand to start 2010 is actually stronger but being watched closely by the trade as South America is on a record production pace to come to harvest next month and March. Near-term corn basis March finds support at 3.54, then 3.42 with resistance at 3.92.
March bean support coming into this week was 3.55. A close under breaks a strong double-bottom making next support at 9.35, then 9.15. Resistance is 9.95 and if taken out, turns beans back to chart bullish.
March wheat support is 4.80, then 4.73 with resistance at 4.98.