GOOD MORNING,
Prices are settling back in trading ranges with some profit-taking and hedge selling on this week's corn, bean, and meal rally. Wheat remains largely ignored, while the winner of best volume for this week went to beans. The short-covering was noted in the meal market and corn. Funds were estimated buyers of around 30K corn Thursday. Oilshare found some profit-taking activity from the bull. Beans may continue to find the most support on Chinese business, but are pulling back today as traders even positions into the weekend. China and the US will participate in a video conference Aug 15, so would look for profit-taking in the bean market from those wanting to reduce exposure to avoid surprises.
We will get the latest commitment-of-trader's report tonight, which will reveal tightened fund positions. Funds are short an estimated 160K contracts of corn, and 25K wheat. Funds are long an estimated 50K contracts of beans and soyoil, while short 20K meal.
WEATHER
US: The 6/10-day outlook is mostly dry with isolated scattered showers across the Midwest. Temperatures near to above normal through Sunday, near normal next Monday. Mostly favorable conditions for filling beans in the Midwest. The US Climate Prediction Center stated that there is a 60% chance of La Nina conditions developing during the 2020 Northern Hemisphere autumn, and a 55% chance it would continue into the winter of 20/21.
World: Dry weather continues to impact Argentina's wheat crop.
ANNOUNCEMENTS
China's economic activity in July continued to improve from the coronavirus shocks, but the growth momentum cooled slightly as Beijing stopped extra liquidity measures. Industrial production rose 4.8% in July vs. year ago, on par with the increase in June, the National Bureau of Statistics stated. Fixed -asset investment dropped 1.6% in the first seven months from a year ago, narrowing from a 3.1% decline in the first half of the year, and better than the 1.8% drop estimated by economics.
France's driest July in at least 60 years led to a deteriorating corn crop. As of Aug 10., corn was rated 65% good/excellent, down from 64% week ago, as reported by AgriMer.
Ukraine's 20/21 grain exports are down 23% so far this year, declining to 4.19 mmt for the 20/21 July-June season, from 5.45 tons at the same point prev., as reported by the economics ministry.
DELIVERIES
beans: 36
soyoil: 241
meal: 109
August futures expire at 12:00 today.
CALLS
Calls are as follows:
beans: 3-5 lower
meal: 1.60-1.80 lower
soyoil: 10-15 lower
corn: 2 1/2-3 lower
wheat: 1/2-1 higher
OUTSIDE MARKETS
In the red today, with crude trading down to $41.77/barrel, and the US dollar at 93.15. Stocks are 80 pts lower.
TECH TALK
- November beans tests its 200-day moving average at $9.03 with trade to the upside of a triangle formation. Long term trendline support slants higher, while short-term resistance is not quite as strong. Look for a pullback to moving averages below the market at $8.88-$8.91 to offer good support.
- December meal prices spike to $300.00 after its reversal trade off ctr lows of $286.50. The key reversal suggested a change of trend was imminent, and foreshadowed the price spike to $300.00. Pullbacks towards $295.00 will now offer up support.
- December soyoil futures place a new high as 3182c, but as usual cannot hold the top with a good close. A pullback to 3080c-3090c will offer up good support and would expect it to hold should we go there.
- December corn prices now attempt to define a sideways trade off ctr lows of $3.20. Would look for gap closure at $3.45/$3.48 to possibly become the top of the market, while $3.25/$3.28 could represent the bottom.
- Sep. wheat futures test $5.00 but would expect to see a challenge of recent lows from $4.89-$4.91.
DECEMBER MEAL
Overall trading range is from $286.50 to $305.00. The key reversal posted this week at ctr lows and the V-shaped bottom add support to a market that could continue to move higher. However, the trend remains weak with an ADX of only 15, which is why rallies continue to fail. At this point, however, the trading range is turned sideways from lower, and the mission of the market is to find a comfortable trading range. The red horizontal lines suggest that range could be from $295.00 - $305.00, which could be straddled or strangled.
TAGS – Feed Grains, Soy & Oilseeds, Wheat, North America
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