2/2/2022

Soybeans enjoyed another day in the green, with higher closes posted from the front month out to March 2023.  The USDA announced the sale of 380,000 tonnes of soybeans to unknown for the 2021/22 marketing year.  We typically assume "unknown" is China and is likely a purchase to ensure supply, depending on how the situation in Brazil finalizes.  We saw a buying blast just after 5:30 this morning that sent Mar 22 beans on a 20-cent rally in one minute.  It's been too obvious over the past week that the bean rally has really been more about trade algorithms and managed money racing each other and less about supply and demand.  Money is starting to feel ragged at this point and some cracks began to form this morning.  The high frequency trade side of the market maybe got too aggressive with the price spike we saw this morning and tipped their hand.  Soybeans did trade 2 lower early in the day session after a sell off but managed to finish with some strength at 16 cents higher on the March 22.  We're seeing a large winter storm system with Colorado, Kansas, Oklahoma, and Missouri seeing snow.  Illinois, Indiana, and Ohio are also receiving a mix of snow and rain.  This should benefit winter wheat conditions and we saw the wheat market as a whole respond largely negative to the weather.  This weighed on corn, as well.  Weekly ethanol numbers firmed corn lower on the day with output increaseding 6,000 barrels/day to 1.04 mln bpd and stocks also increasing 1.38 mln bbls to 25.85 mln bbls.  Current ethanol implied use and gasoline demand are around 5-year lows.

Bearish reversal for corn today.  Corn remains a follower for now but appeared to be forming a bull flag before today.

March soybean 5 minute chart:  A lot of volatility and a lot of entry opportunity no matter what your position may be.  Don’t want to be the bag holder here.