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Early Call 8:45am EST: Corn up $.01, soybeans steady, wheat up $.05. The grain and

oilseed complex traded steady to higher overnight into Wednesday morning. Look for

continued volatility Wednesday in equities with DJIA futures swinging wildly again

overnight. The U.S. dollar was stronger again, putting pressure on the energy complex

while metals traded mostly higher. Softs were mostly lower, with cotton able to post

small gains. The index fund roll is expected to start today, which will boost CBOT

volume at the close.

Grains: Grain and soybean futures bounced Tuesday as traders bet that hot and dry

weather in Argentina would create an opportunity for U.S. exporters. Argentina, a major

producer of corn and soybeans, struggled through heat and dryness for large parts of its

growing season. Rain later this week and over the weekend is expected partially relieve

crops, forecasters said, before difficult conditions return next week. As a result, analysts

expect the USDA to lower its production estimates for the South American country in

its monthly supply-and-demand report tomorrow. That could create more opportunity

for U.S. exporters to fill the void. Global sales of American corn have recently picked

up. The USDA said on Tuesday morning that exporters sold 120,000mt of the grain to

Japan alongside a further 105,000mt to unidentified customers, both for 2017-18. U.S.

corn is currently a bargain on the global market and both sales and shipments have

picked up. The Argentine drought increases the odds that we could see corn production

decline in the major producers. Grain and oilseed markets also benefited from a

turnaround in chart signals, which traders interpreted as indications that prices hit a

short-term bottom. That encouraged them to buy contracts ahead of the USDA's

Thursday report. Soybean futures for March rose 1.7% to $9.86 1/4 a bushel at the

Chicago Board of Trade. March corn contracts climbed 1.3% to $3.63 1/2 a bushel

while March wheat gained 1.4% to $4.46 1/4 a bushel.

The best chance of rain in Argentina is with a frontal passage from Saturday into

Monday, with totals estimated in a range of .25-1.25”. The southern half of the

Argentine ag belt looks to receive just .2-.6” of rain while the north sees totals near

Daily Grain / Hogs Marketing Outlook Written by: Jim Gerlach

2/7/2018

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1.00”. Rain was limited to the southwest fringes of Argentina overnight, with highs

mainly in the mid/upper 90s, with a few low 100s in far northern/southwestern areas

yesterday. Slight adjustments were made to the rain placement forecast Thu-Fri, but the

next result reaches 2/3rd of the Argentina with about 1” on average. Similar heat the next

two days eases into next week, but a brief return of 90s are possible around the end of

the 6-10 day period. About ½ of the belt is currently under stress and will rebuild once

again in central/southern Argentina after next week, but there are some wetter model

risks. In Brazil, lessening showers in the Center-West region will limit fieldwork

interruptions, but delays start to mount next week in central Brazil. Showers early next

week and in the 11-15 day period are adequate for far southern Brazil. In the U.S.,

southern Plains dryness continues the next two weeks, while Delta wheat sees rain end

moisture deficits. More light snow in the Midwest wheat belt next weekend adds further

protection from cold pushes and needed moisture. The 90-day SOI is just 3.46 and the

daily indicator is in full retreat at 27. La Nina requires a +8 90-day SOI. The La Nina is

still in effect, as reflected in drought in both Argentina and the U.S. southern Plains, but

if this trend in SOI keeps up, it will be gone by spring as is forecast by most

climatologists.

The USDA ag attache sees Brazil’s total corn crop at 92mmt, below the USDA at

95mmt and down from last year’s 98mmt due to a reduction in first crop planted area

and on average yields for the second crop being planted. With about 70% of Brazil’s

corn crop second crop, yields and acreage that gets planted will be critical. Planting so

far is running behind in key locations due to the slow soybean harvest and could

ultimately impact acreage decisions. Current ideas suggest a 9% cut in second crop corn

acreage, with profitability favoring cotton at this time. Despite the lower crop, the

attache sees corn exports the same as last year at 34mmt due to larger carry in stocks of

11.2mmt vs. 6.8mmt the prior year. The attache sees Brazil’s soybean production at

112.5mmt vs. the current 110.0mmt USDA forecast. He reduced soybean exports to

65mmt from 68.3mmt previously and the USDA at 67.0mmt. Local consultancy

AgRural raised their Brazilian soybean estimate to 116.2mmt from 114.1mmt

previously. The Buenos Aires Grains Exchange says that if currently forecasted rains in

Argentina this weekend and next week fall short, the soybean crop could decline to as

low as 40mmt vs. their current estimate of 51mmt (USDA 56mmt) and last year’s

57.8mmt, indicating just how important these rain events are for the crop. A prominent

South American crop scout is pegging Brazil/Argentina soybean production at

112mmt/51mmt, respectively and pegs the 5 nation South American soy crop at

178.6mmt (down 9.1mmt vs. last year), while pegging corn at 132mmt, down 11.3mmt

from last year assuming Brazil/Argentina crops at 88mmt/39mmt, well below USDA

forecasts.

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A Reuters survey suggests the expectation is for WASDE to reduce their Argentine

soybean production estimate to 54mmt in Thursday's monthly report, which would

result in a yield that is 0.6bpa (1.4%) below trend, assuming no change to harvested

area. According to a report from Mike Tannura at www.tstorm.net, soybean yields have

varied widely in Argentina since 1981, most notably including seven years in which the

yield was at least 10% below trend, implying the downside risk to yields is high in poor

weather years. The coverage of dryness is extensive in Argentina with 69% and 84% of

soybean production having been drier than normal over the last 30- and 90-day

periods. Our data set is new in Argentina, which does not allow us to compare current

dryness to previous growing seasons, but we do have similar data for the U.S. dating to

2011. The U.S. soybean yield was 10% below trend in 2012. Overlaying 30- day dryness

from Argentina and the U.S. over approximately the same growing periods (starting

December 1, 2017 in Argentina, and June 1, 2012 in the U.S.) shows that the coverage

of 30-day dryness in Argentina was considerably lower over much of the last five weeks

than at approximately the same period of late-June and July of 2012 in the U.S. This

indicates that Argentina soybeans were wetter than at the height of U.S. drought in

2012. However, the coverage of 90-day dryness in Argentina has been similar to higher

than the same period in the U.S., indicating the 2017-18 drought in Argentina began

earlier than the 2012 drought in the U.S., such that dryness has been a potential

problem for a longer period of time for Argentina soybeans. The Argentina drought has

yet to break with some significant rainfall in expected in central and northern areas

over Friday-Sunday, though totals over the next two weeks are expected to be below

normal (1.00" to 2.00" north, 0.50" to 1.00" south). Argentina soybean yield of at least

10% below trend (49.3mm or lower) cannot be ruled out unless 30- or 90-day dryness

diminishes over the next few weeks. Historically, note that yields were ~25% below

trend three times since 1980/81, indicating the lowest production potential is around

42mmt, but likely only if significant stress exists now, and rains failed this weekend and

beyond (we are confident in at least some helpful rains this weekend).

The CME is said to be exploring the corn/soybean futures contracts on complaints that

they’re not representing the cash markets very well. Farmers out in the Dakotas don’t

need to be told that after watching basis levels drop $1 below futures on several

occasions over the last few years. Some traders are calling for cash settlements rather

than physical delivery points on the river. The CME has already made changes to the

SRW wheat contract by introducing the variable storage rate in an attempt to force

greater convergence between cash and futures. One thing that many grain producers and

some traders have yet to grasp about the markets is how much they’ve changed in the

last 20 years regarding the impact non-commercial money has had on prices. While the

value of U.S. farm goods has risen over the last 20 years, it’s nothing compared to what

equity values have done. In fact, a look at the attached chart that shows the S&P 500 vs.

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the S&P Commodity Index shows

the furthest divergence in values in

47 years (through the end of 2017).

As a grain/livestock trader, to

know your “enemy,” you must

understand him first. Non-

commercial investors buy or sell

based on relative value, while

commodity traders, where there is

a buyer for every seller, tend to

trade absolute value. Relative value

means how does an asset’s value

compare to other potential

investments, while absolute value means how does an asset’s value compare to its

stocks/use ratio and/or cost of production. Most grain traders right now are looking at

surplus stocks/use ratios and years of good crops as reasons why prices will stay low.

Non-commercial traders are looking at the chart I attached, rising bond yields leading to

inflationary fears and ideas that the easy money in the stock market has already been

made. Normally, when the stock market corrects, grain/livestock prices sink with it.

However, many were simply waiting for the “music to stop” in the stock market before

looking for a seat in other, undervalued investments. We’ve seen that the last week as

stock prices plummeted, yet grain prices have held together or rallied. Longer term,

cheap grain prices already appears to be stimulating demand, with growth in foreign

ethanol imports likely to be the “next big thing” in the grain markets. Until then, be

careful to base your marketing decisions solely on absolute terms as the “big money”

sees relative value in commodities, with grains/oilseeds the cheapest of the cheap.

On the demand front, Asian crude palm oil futures recovered to end 0.6% higher

Wednesday, tracking gains in competing soy oil prices. However, the price rise is

expected to be short-lived amid prediction of weaker export demand. China is said to be

studying the potential impact of trade measures imposed on soybeans imported from the

U.S., including anti-dumping and anti-subsidy probes, according to people familiar with

the matter. China’s Ministry of Commerce has been studying the possibility of taking

measures since January, the people said. The ministry held a meeting on Tuesday with

some Chinese companies to get feedback about the potential impact, the people said. No

conclusions were reached at the meeting, they said. If China took action against U.S.

soybeans, this would be considered a full-on trade war, making such an action unlikely

unless the U.S. imposes further tariffs. The U.S. is competitively priced in the world

corn market, although exports could be trimmed back from potential trade dispute with

China over U.S. sorghum. Chinese buyers have reportedly cutoff U.S. DDG exports

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amongst fears are that the same thing could happen the them as did to U.S. sorghum

exports. Protests in Argentina by truckers demanding higher rates have all but stopped

crops from getting to ports at export hubs along the Parana River. However, this is the

time when crop movement is light, so the effect will be minimal. Taiwan bought

77,200mt of U.S. milling wheat. Tunisia bought 125,000mt of optional origin durum.

Japan is seeking 100,517mt of wheat from Australia, Canada, and the U.S.

Archer Daniels Midland unveiled an upbeat outlook for biofuel markets, helped by ideas

of strong Brazilian and Chinese imports of U.S. ethanol and the return of a tax perk on

biodiesel. Juan Luciano, chairman and chief executive of the U.S.-based ag trading

giant, said that a “primary” driver of a 15.5% decline in profits at its oilseeds division in

the October-to-December quarter, in results released on Tuesday, had been the

assumption that the U.S. would not repeat a biodiesel blenders’ tax credit. However, he

spurred ideas that Congress may renew the $1-per-gallon perk, talk of which was indeed

credited by investors as sparking a 2.0% jump in soyoil futures for March in Chicago in

the last session. On ethanol, meanwhile, Mr. Luciano said that “we are particularly

encouraged about the demand side, especially from exports”. Ethanol exports last year

had accounted for some $1.4 billion and were poised to rise to $1.6-1.7 billion this year,

with growth particularly in China and Brazil. “We see strong demand in Brazil,” while

in China an effort to lift the ethanol blend in gasoline to 10% is running in the country

“not having enough capacity to supply that. “So we will have China and Brazil for the

next two or three years being big importers from North America ethanol.” The USDA

said in a briefing overnight said that construction has started on two Chinese ethanol

plants expected to raise the country’s capacity by 25-33% by 2020. State grain trader

Cofco is building a plant in Liaoning in China’s north east – the key corn-growing

region – with capacity for consuming 3mmt of corn a year, while China’s State

Development & Investment Corp has begun work on a site in nearby Liaoning able to

take 990,000mt of corn a year. The State Development & Investment Corp also has

plans for further ethanol sites, “including a plant in Huludao, Liaoning expected to

consume 13-17mmt of corn per year”, the briefing noted. However, that’s not near

enough to meet the 10% blending mandate in 2020.

USDA Secretary Sonny Perdue tried again to soothe fears over the fate of agricultural

trade during his second appearance before the House agriculture committee, where

lawmakers fretted over exports of goods like sorghum, soybeans and beef. Perdue

acknowledged that the farm economy is highly sensitive to trade disruptions, saying

sorghum prices recently dropped 25% after news that China, a major market for the US

grain, had launched a probe into sorghum imports that could result in large tariffs. "We

think the sorghum issue will mollify over a period of time," Perdue said. On NAFTA, he

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said, "If we get the Mexico politics out of the way (Presidential election), I think we'll

have a deal before the end of the year."

Hogs: Cash hogs are called steady to $1 lower, although most bids are expected steady

to weak. The national bid was unchanged at $72.66, while the IA/MN bid was up $.11

at $72.67. The CME Lean Hog Index was up $.38 on February 2 at $74.48. The USDA

pork carcass cutout value was $1.89 lower at $78.23 on good movement of 394 loads.

The loin was the only cut reported higher. Aggressive follow-through pressure has

developed in pork cutout values, with the belly market leading the market tumble by

falling nearly $17 over the last two trading sessions. The concern that additional

widespread weakness may be seen in most primal markets and could lead to follow-

through pressure in cash and futures trade in the near future. Monday’s cutout value was

the lowest since Dec 28th. Estimated packer margins were $4.30/head for non-

integrators and $35.98/head for integrators vs. $8.64 and $39.98 the previous day.

Weekly kill is up 4.86% vs. last year. Aggressive packer activity through the week has

continued to limit the amount of market ready hogs available to market. This is likely

one of the reasons for the lighter weekend runs expected this week with an estimated

85,000 head scheduled to move through plants on Saturday. If market-ready hogs

continue to be harder to gain access too, packers are likely to need to increase spending

in order to maintain the recent daily norm or 465,000 head per day. April hogs opened

lower, tested the $72.82 key level and broke down hard. It traded down to the low of the

day ($70.60), which is just above support at the 200-day moving average ($70.45) and

ended the day at $71.40. This is just above the key level at $71.32 and rising trendline

support at $71.25. Trading above here on Wednesday could lead to a test of resistance at

$71.85 and then $72.82. A break down below the trendline ($71.40) on Wednesday

could see price revisit the 200-day moving average. Support then comes in at $70.15

and $69.30.

Follow-through pressure is expected in lean hog futures trade as nearby contracts

continue to test short-term support levels. Even though the lightly traded February

contracts remain in a sideways pattern well above support levels, April contracts have

taken out January lows in the last two trading sessions and are within striking range of

moving below December support of $71.17. A move below that level would likely spark

additional liquidation, putting a move below $70.68 as the next market target. Livestock

futures fell yesterday as recent selling in U.S. stocks sparked concerns about weaker

domestic meat demand. Strength in the U.S. economy helped stoke demand for red

meat, analysts said, as better-off consumers splurge on more beef and pork. That

bolstered livestock prices in recent months, offsetting supply pressure from growing

cattle and hog herds. Indications that scenario might change were enough to push

futures traders into a cautious mode, observers said. U.S. equities steadied on Tuesday,

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however, with some indices turning higher in the morning. If we get another meltdown

in the financial markets, things could get a little goofy in futures. Lean hog futures for

February delivery fell 1.4% to 74.75 cents a pound at the Chicago Mercantile Exchange

on Tuesday. The more-actively traded April contract fell further yet. CME February live

cattle contracts slid 0.4% to $1.25625 a pound. Other supply-and-demand factors, like

weak physical hog prices, added to pressure. Market observers said they expected cash

prices for slaughter-ready hogs steady to lower, after starting the week little changed.

Wholesale pork prices fell sharply on Monday, sparking further selling, before

rebounding late Tuesday morning. Analysts were looking for indications of where the

cash cattle market was headed this week. Prices last week averaged $126 on a live basis

and $200 dressed. Show lists of slaughter-ready herds were slightly larger this time

around, though feed yards were asking meatpackers for around $130 on a live basis to

sell their cattle. Around 900 head were listed at the online Fed Cattle Exchange auction,

due Wednesday morning.

U.S. pork production last week was up 5.6% vs. last year. Years with similar setups to

this year include 2015, 2008 and 1998. In 2015, April hogs fell from the $85.00 area in

December to $57.77 by March 20th. In 2008, April hogs fell from the $67.00 area in

January to $54.12 by March 20th. In 1998, April hogs fell from the $60.00 area in

December to a contract low of $47.30 by the end of March. Of course, none of these

years featured a record jump in slaughter capacity, so year to year comparisons are a bit

dated. Still, it doesn’t seem to bode well for higher prices into contract expiration either.

In Q1 2018, global pork supply is forecast to increase further, mainly driven by the

U.S., Canada, and Brazil. However, according to RaboResearch, “the most significant

story in global pork markets has been the slowing imports into China, which creates a

risk of oversupplied global markets. However, we do expect China’s imports to pick up

somewhat over the rest of the year, leading the EU, the U.S., and Canada to continue

their battle for China’s pork market in 2018.” Rabobank states that this drop in

availability follows capacity reductions triggered by stricter environmental policy

enforcement in 2017. They expect the EU’s increased production to reach the market

beginning in 2018. Additional supply is expected to pressure pig prices and cutout

values. This price decline could stimulate consumption and exports. In the U.S., faster

growth in U.S. pork production of 4.3% will necessitate the free flow of exports and

healthy domestic demand. Strong exports to start the year have intensified the

competition for market hogs, to the detriment of packer returns. In Brazil, local pork

demand is expected to increase, along with the improving economic conditions.

Expected stabilization of feed costs will continue to support good profitability for hog

producers for much of 2018. Russia’s ban on Brazilian pork remains a wild card for

2018.

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Weather: The U.S. and European models are in fair to good agreement during the

outlook period. We continue to see a strong ridge over the eastern Pacific that extends

northward through the Gulf of Alaska into southern Alaska and eastward into the west

coast states. We also see a strong ridge over the western Atlantic that extends into the

east-central and southeast U.S. and across the Gulf of Mexico. A strong polar vortex

remains in the vicinity of Hudson Bay, Canada and ranges at times to southern

Greenland and possibly merging with another trough over the northern Atlantic. In the

U.S., we note an extension of the polar vortex extends south into the area between the

Dakotas and the Great Lakes. We also note a weak trough over the central Rockies

region as well. This is a cold or very cold pattern for the central and east Canada area

and the north-central to the Great Lakes region of the U.S. This is a warmer pattern for

the west coast states, the Gulf Coast States and the east coast states, except possibly

somewhat more variable for the northeast U.S. states. A more variable temperature

pattern is also likely for the southern Midwest region and for the central and southern

Plains wheat belt. Precipitation chances remain highest over the Delta to the middle

Atlantic region and in the southeast U.S. It appears that most of this enhanced

precipitation chance stays along or south of the Ohio river. However, the stronger

southeast ridge may try to force this precipitation shield further north than what is

currently indicated. The chance for meaningful rainfall in the Plains winter wheat belt

remains low.

Dry weather dominated the Argentine and southern 2/3rds of the Brazilian growing

regions yesterday, with rains of .50” or less falling across around 85% of the Brazilian

growing states of Mato Grosso, Goias and Minas Gerais. High temps were in the 90’s

in most of the Argentine growing regions, with some 100’s in the far west. Highs in the

Brazilian growing regions were in the 80’s and 90’s. Limited rains look to fall across

most of the Argentine growing regions through tomorrow and then by Friday, into the

weekend, fairly widespread and soaking rains look to fall in most of these areas. Dry

weather then looks to return for most of next week. Fairly limited rains also look to fall

from RGDS north through Santa Catarina, Parana and into Sao Paulo/MGDS through

tomorrow, with healthy rains to fall in the rest of the Brazilian growing regions. The

weekend and next week sees close to average rains to return to all of the Brazilian

growing regions. Temps look to run average to above in Argentina this week, with near

average temps in Brazil. The 6-10 day sees below average temps in Argentina and

southern Brazil, with average temps in the rest of Brazil.

Snows of 1-3” fell across the northern 1/3rd of KS, with things mainly dry in the rest of

the southern Plains yesterday. More snows also fell across most of IA, S MN/WI/MI

and northern sections of IL/IN/OH in the past 24 hours, with totals of 1-3” in most

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cases. Temps ran below average in the southern Plains and all of the Midwest, with

highs in the teens and 20’s in the southern Plains and lows in the single digits and teens.

Highs in the Midwest were in the single digits and teens north, with teens and 20’s

south. Lows in the Midwest were in the single digits above and below zero. A couple of

weather systems look to bring moderate rains and snows to the southern Plains in the

next week to ten days. Most of the precip in KS will fall as 2-5” of snow, with rains of

.10-.50” in OK and TX. Several systems will bring snows to much of the Midwest in the

next 10 days. The largest system will roll through later Thursday into Friday and bring

4-12” snows to IA, southern MN, the southern 1/3rd of WI/MI, northern 1/3rd of IL and

far northern IN, with lighter rains and snows in the southern Midwest. Some light snows

are seen for the north next week, with light to moderate rains and snows in the south

next week. Temps will be running below average across the Plains and Midwest for

most of the next week to ten days, although no cold air threats are seen for the Plains

and snows will be on the ground to protect any crops exposed to damaging temps in the

Midwest.

Global Weather Highlights: Hot to very hot temperatures in Argentina through

Wednesday and possibly Thursday maintains high stress levels on reproductive and

filling corn and soybeans. It now appears likely that yield potential for both crops will

be declining until rain arrives or temperatures decrease. Showers and cooler

temperatures at the end of this week should help ease stress to crops at that time. Recent

heavy rains in northern Brazil over Mato Grosso, Goias, west Bahia may favor filling

soybeans, but will be unfavorable to maturing soybeans and the harvest. A drier period

at this time will help ease concerns somewhat. Mostly favorable conditions continue for

crops from Parana to RGDS. The drier period in southern Brazil currently in place

should come to an end this weekend. Episodes of scattered to widely scattered showers

and a variable temperature pattern occurs in South Africa during the next 7 days. This is

somewhat favorable for the crop at this time, although western areas could use more

rain.

North American Weather Highlights: Episodes of snow in the South Dakota-Iowa-

Nebraska areas will impact transport at times this week. Cold temperatures will stress

livestock, especially over the Dakotas and Minnesota. Some precipitation occurs for the

north and central areas of the HRW wheat belt, but not enough to make much difference

overall. Cold temperatures occur at times, but it does not appear to be cold enough to

impact the wheat crop.

Macros: The macro markets were weak as of 8:20am EST, with Dow futures down

0.4%, the U.S. dollar index is up 0.4%, crude oil is down 0.3% and gold is down 0.3%.

The S&P 500 fell to a 2-1/2 month low but recovered its losses and closed 1.74%

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higher. The DJIA gained 2.33% and the Nasdaq gained 2.62%. Bullish factors included

dovish comments from St. Louis Fed President Bullard who said, "continued strong

U.S. labor market performance is unlikely to translate into meaningfully higher inflation

because Phillips curve effects are weak," and comments from Treasury Secretary

Mnuchin who said the recent plunge in stocks is a "normal market correction." A

bearish factor was the unexpected 67,000 decline in U.S. Dec JOLTS job openings to a

7-month low of 5.811 million, weaker than expectations of +82,000 to 5.961 million.

The T-note market has not been particularly impressed with this week's stock market

volatility. The 10-year T-note yield early Tuesday fell to a 1-1/2 week low of 2.65% but

then recovered to close the day sharply higher by 9 basis points at 2.80%. That was just

8 basis points below Monday's 4-year high of 2.88%. The fact that T-note yields

snapped higher on Tuesday after stocks recovered suggested that the T-note market does

not believe that this week's stock market volatility has caused any significant shift in the

hawkish inflation and Fed rate hike outlook. The House Tuesday evening approved a

continuing resolution that will last through March 23. The House CR contains full-year

spending for defense, which is a poison pill for Democrats who insist that defense and

non-defense spending must be raised by roughly equal amounts in a final 2-year

spending deal. If Democrats were to go along with full-year defense spending in a CR,

then they would be giving up their leverage on raising non-defense spending. Senate

Minority Leader Schumer insists that Senate Democrats would not allow such a CR to

pass the Senate, even at the risk of a another government shutdown. However, there

were reports on Tuesday that Senate Majority Leader McConnell and Minority Leader

Schumer are very close to a deal for 2-year spending levels. That would avert a

shutdown and would eliminate the obstacle caused by the House when it added the full-

year of defense spending to the CR. The market consensus for today's weekly EIA

report is for a 2.9 million barrel rise in U.S. crude oil inventories, a 1.0 million barrel

rise in gasoline inventories, a 1.25 million barrel decline in distillate inventories, and a

0.4 point decline in the refinery utilization rate to 87.7%. U.S. crude oil inventories last

week rose sharply by 6.8 million barrels, breaking the string of 10 consecutive weeks in

which inventories decline. Nevertheless, U.S. crude oil inventories are only 5.0% above

the 5-year seasonal average, the tightest such level in 3-1/4 years.

Overnight, Bloomberg News reported that the rebound in stock prices spread to Europe,

but markets remained on edge as Asian equities pared their advance while U.S. futures

retreated. Treasuries rebounded after Tuesday’s slump, gold climbed and crude gave up

gains. The Stoxx Europe 600 Index headed for the first increase in eight days as most

sectors on the gauge rose. Earlier in Asia, Japan’s benchmarks eked out slim gains at

the close after retreating from the session’s highs, while Chinese shares dropped. The

dollar advanced and emerging-market equities stabilized after Tuesday’s plunge.

Markets from Europe to Japan tumbled into oversold territory after the rout of the past

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week, which was triggered by rising bond yields and the prospects for a return of

inflation and subsequent tighter monetary policy. Amid a slew of calls to “buy the dip,”

investors will be watching Wednesday’s auction of 10-year Treasuries for clues on

where markets go from here. Elsewhere, the Cboe Volatility Index, a gauge of implied

volatility for the S&P 500 Index, edged higher after Tuesday’s pullback. Oil gave up

earlier gains and Bitcoin edged higher, rising above $8,000.

The Stoxx Europe 600 Index increased 0.5 percent as of 11:29 a.m. London time, the

first advance in more than a week. Futures on the S&P 500 Index sank 0.9 percent. The

MSCI Asia Pacific Index climbed 0.1 percent. The U.K.’s FTSE 100 Index gained 0.6

percent, the first advance in more than a week. The MSCI Emerging Market Index fell

less than 0.05 percent, hitting the lowest in more than five weeks with its fifth straight

decline. The Bloomberg Dollar Spot Index climbed 0.2 percent to the highest in more

than two weeks. The euro decreased 0.3 percent to $1.2346, the weakest in more than

two weeks. The British pound dipped 0.5 percent to $1.3876, the weakest in almost three

weeks. The Japanese yen jumped 0.4 percent to 109.11 per dollar. South Africa’s rand

declined 0.4 percent to 11.9674 per dollar. The MSCI Emerging Markets Currency

Index increased 0.3 percent, the first advance in a week. The yield on 10-year

Treasuries declined four basis points to 2.77 percent. Germany’s 10-year yield climbed

one basis point to 0.70 percent. Britain’s 10-year yield fell less than one basis point to

1.52 percent, the lowest in a week. West Texas Intermediate crude decreased 0.4

percent to $63.16 a barrel, the lowest in more than four weeks. Gold advanced 0.3

percent to $1,327.76 an ounce.

Summary: Corn fell through the 100-day moving average overnight, but turned around

for the day session and ended higher, supported by technical buying on an “outside day

up” reversal higher. CBOT open interest rose 13,578 in corn, but fell 10,803 in

soybeans and 7,040 in wheat as funds were covering shorts in wheat and soybeans, but

going net long in corn. U.S. exporters sold 120,000mt of corn to Japan and 105,000mt

of corn to unknown for the 2017-2018 marketing year. The worry that China may stop

accepting U.S. sorghum imports in the future may sway farmers to growing more corn

or soybean acres next year, serving as overhead resistance to the corn market that is

supported by recent exports. March corn traded a high of $3.64, the highest trade value

since November 6th, 2017. Traders expect the Brazilian corn crop to be adjusted lower

in Thursday’s USDA report. Currently, the USDA January report has Brazil corn

production at 95mmt, while trade expects 93.73mmt in the USDA report on Thursday.

Soybeans rebounded on ideas that rain forecasted for Argentina will not be enough and

technical buying after soybeans declined four sessions in a row. The U.S. in December

2017 imported 318.5 million pounds of rapeseed oil, 43 million pounds less than

December of 2016. But for the period October through December of 2017, imports were

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1.108 billion pounds, which is on par with 2016 for the same time frame. In December

2017, the U.S. imported 260.7 million pounds of palm oil, 48 million pounds more than

December of 2016. The October through December imports of 2017 were also larger

than that of 2016. Traders are thinking that CONAB could change their bean production

estimate for Brazil on Thursday. Right now, the CONAB has Brazilian soybean

production pegged at 110.4mmt, expectations are for that to be revised up to 111-

113mmt on Thursday. Currently, the USDA has Brazil soybean production at

110.0mmt, while traders are expecting the USDA to revise that number Thursday to

111.20mmt. North and central areas of Argentina are set for rain the end of this week

into next, but coverage is more limited than originally thought with dryness and heat to

follow. Brazil is expecting pretty average rainfall this week into next, covering most

areas with some wetness that could develop again in Parana. Northeastern Brazil

dryness favors soybean harvesting. Wheat bounced as traders bought breaks after four

negative sessions in a row. Short covering was another factor supporting the markets, as

traders worry once again about dry conditions in the U.S. southern Plains. Algeria’s

state grains agency is tendering for durum wheat, with delivery in the month of April.

Jordan did not make any purchase in a tender for 100,000mt of wheat that ended

yesterday. Ethiopia is tendering for 400,000mt of milling wheat after initially awarding

the same quantity in December, but did not make a final purchase due to contractual

disagreements. Ethiopia is dealing with the aftermath of a drought that devastated

farmers’ crops in some regions.

March corn shrugged off recent weakness and surged higher on Tuesday, closing higher

in a large bullish outside day. The short-term corn trend is positive, as the March

contract trades above its 20-day, 40-day and 100-day moving averages. Longer-term,

the 200-day moving average at $3.75 ¼ is the bulls’ target. Tuesday's rally took March

corn to its highest level since early November. On the upside, nearby resistance and

bullish corn targets lie at $3.65 1/4, the Nov. 2 high and then $3.69 1/4, the Oct. 25

high. On the downside, initial support lies at $3.62 1/2 and then $3.56 1/4, the latter

representing Tuesday's low. As long as support at $3.56 1/4 holds firm, corn bulls will

retain the near-term technical edge. March soybeans thrust sharply higher Tuesday,

forming a large bullish outside day. The action carved out daily chart support at $9.67

3/4 and gives bean bulls the short-term technical edge. The market faces immediate 10-

day moving average resistance at $9.87 and sustained gains above that zone on

Wednesday would be a positive near-term trend signal. The recent sell-off from the Jan.

30 peak at $10.04 3/4 was swift, but the March bean contract approached and rallied

from key Fibonacci retracement support at $9.67 1/2 on Tuesday. That represents 6.18%

of the Jan. 12-Jan. 30 rally phase and is a positive near-term trend signal. On the upside,

minor resistance points and bullish targets lie at $9.95 1/2, $10.02 and then $10.04 3/4.

On the downside, nearby support lies at $9.77 1/2.

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