FROM WEATHER TO GOVERNMENT MEETINGS: New Highs In Soybeans Monday

On Monday's USDA Weekly Export Inspections Report, wheat inspected to be exported this week totaled 16.5 million bushels, one million over our 4-week average. Corn was 29 million bushels, equal to our strong 4-week average and over a year ago by two million bushels, pushing yearly inspections to 740 million bushels.

We have steadily been catching up on exports with buyers considering drought in Mexico and Argentina. Look for sales to continue to exceed prior year levels.

Bean inspections were 38.5 million bushels, up one million from the week prior, and three million more than a year ago, also equal to the 4-week average. China's imports of the total were 25 million versus 30 last week, but this step back is due to meetings this week in Washington between President Obama and the Chinese Premier. They are discussing the new grain trade agreement. Last year's meeting led to an announcement upon completion that we sold China a single record 4 million metric ton soybean purchase for delivery in this year's marketing season. What we'd seen the three prior years were announcements of lesser totals, for immediate delivery (not seasonal-based delivery.)

However, in spite of the friendly impending announcement about a Chinese purchase of U.S. soybeans, it was weather report for South America that ruled Monday's trade. The forecast calls for a heat dome that entered over the weekend into Brazil and Argentina to last until next week. This bullish weather news pushed beans up 23 cents, as 40% of the beans in those nations are still developing the pod. Beans carried corn and wheat along in spillover buying.

Early trading gains were cut in half about midday, on talk that one of the key weather forecasting models had flipped, and it had begun calling for heavy rains in Argentina and in southern Brazil by the weekend. Then, at the close, beans soared to new highs pulling other grains along.

Today (Tuesday) was similar with strength in beans pulling corn and wheat off lows early, until rainy forecasts caused a late selloff with markets near the lows at closing. Our favorite weather website continued to forecast rain ahead in South America, such that the weekend may see Argentina with 1 to 3 inches with 70% coverage and the front continuing over southern Brazil Monday and Tuesday for .25 to 1.50 inches and 60% coverage there.

If beans are going to close over the $12.60 resistance basis March futures, we need to see the rain in Brazil dry up. If the somewhat bearish weather forecasts hold true, we could pull back prior to the weekend.

The technical objectives: support for March corn is $6.28 then $6.24 and $6.16. Resistance is $6.47 then $6.58. Bean support is $12.40 then $12.20 with resistance at $12.60 then $12.70. March wheat finds support at $6.20 then $6.00. Resistance is $6.70.