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Daily US grain report: market bulls more upbeat at mid-week

US grain futures are steady to higher in early US pre-market trading Wednesday. Corn is up around 1/2 cent, soybeans around 5 cents higher and wheat is around 5 cents up.

5 February 2020, at 4:59pm

Global stock markets are in full rally mode at mid-week, as traders and investors have pushed aside earlier concerns about the coronavirus outbreak in China significantly denting world economic growth. That’s also a bullish scenario for the grain markets. The marketplace is reacting to the rate of spread of the illnesses slowing down, even though total numbers of those afflicted is rising.

As is many times the case, an unexpected shock to the marketplace is initially deemed by traders as being close to a worst-case scenario and market prices react accordingly. Then, such turns out not to be the case, as is apparently so with the coronavirus outbreak.

The marketplace this week sees it as especially encouraging that China’s central bank stepped in an provided significant liquidity to China’s financial system, specifically by reducing short-term lending rates with the influx of funding. The effort was in response to the coronavirus outbreak’s negative impact on China’s businesses.

Grain market bulls should not get too excited, however, as US grain exports remain tepid, with soybean prices still fetching more on the world market than South American soybeans. Also, weather conditions in South American growing regions remain mostly favourable, suggesting big corn and soybean crops will be harvested there.

Bears have solid chart advantage amid steep price downtrend line; more gains this week would suggest market bottom is in place
Bears have solid chart advantage amid steep price downtrend line; more gains this week would suggest market bottom is in place

© Jim Wyckoff

Bulls stabilise market at mid-week; this suggests the downside for prices is limited in the near-term
Bulls stabilise market at mid-week; this suggests the downside for prices is limited in the near-term

© Jim Wyckoff

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