GOOD MORNING,

Prices continue lower as funds are taking money out of the markets on technical considerations as more bearish formations create a down-turn, but also on macro considerations as pre-election jitters arise.  Spreads are breaking down as well.   Crude oil drops to $35.36/barrel, driving commodity basket prices lower.  Crude has been a consistent barometer of commodity strength or weakness, and today it seems to be creating weight on the indexes in general.  

Meal prices are lower but suffer the least amount of loss as continued problems in Argentina's crush industry returns business to the US.  Argentina's main union for crushing workers staged a strike after a proposed Covid-19 bonus payment fell short of expectations.  If the standoff lasts, shipments could slow further.  Crush values remain extremely attractive in the US to make up for any shortfalls. 

WEATHER

--Midwest weather was wet and cold this week, but the next week appears to offer a drier and warmer outlook which will be good for wrapping up harvest.  

--SA continues to see periods of showers for planting and germination in Brazil.  Argentina sees more rainfall but not enough yet to break the overall drought.  Weather is bearish.

REPORTS

Export Sales:

Beans: 20/21 net 1.62 mmt and 21/22 net 9,000 mt (vs. an expected 1.0-2.0 mmt)

Meal:  20/21 net 199,300 mt (vs. an expected 100-400 kmt)

Soyoil:  20/21 net 6,000 mt (vs. an expected 2-35 mt)

Corn:    20/21 net 2.24 mmt (vs. an expected .740-1.5 mmt)

Wheat: 20/21 net 743,200 mt and 21/22 net 60,000 mt (vs. an expected 200-750 kmt)

Gist of report saw solid sales in the soy complex, with better than expected numbers for grains.

ANNOUNCEMENTS

SLC Agricola, a large company in Brazil, forecast a good overall grain harvest despite a late start.  They stated that harvest could begin between Jan 10 to 15, which would only be a 10-day lag period.

H5N8 bird flu was found in the Netherlands in the central part of the country, which will result in the culling of 35,700 birds to control the spread.  

Argentina's USDA attache forecasts 20/21 corn production at 48.0 mmt, below the 50.0 mmt official forecast, with analysts’ expectations falling between 47.0 - 49.0 mmt.  

Russian data released shows grain harvest at 132.6 mmt, up 11.5% vs year ago, with 95% harvested so far. 

CALLS

Calls are as follows:

beans:  3-5 lower

meal:  2.20-2.50 lower

soyoil:  20-25 lower

corn:  3 1/2-4 1/2 lower

wheat:  5-6 lower

OUTSIDE MARKETS

Outside markets show further weakness with crude oil trading down to $35.71/barrel as the US dollar trades up to 93.35.  The stock market is down 92 pts.  China stocks are lower while Europe stocks are higher.  

TECH TALK

Markets drop lower today and arrive at key support levels.  If these levels are broken, more liquidation is almost certain.  

Dec. Soyoil:  The key support level in Dec. soyoil is 33c, and violation here will find prices trading back to 3260c/3270c.   Best support under the market is 3270c, which would be a place to cover a short or go long.  

Dec. Meal:  Key support level is $370.00, and thus far the market has held it well on chart weakness.  December meal prices congested from $371.00-$380.00, and had an impressive bounce off major support at $370.00.  If short, would think about scale-down covering on a move back towards $370.00.  

Jan Beans:  Jan bean prices have major support at $10.48 and prices have arrived there. The market has shown amazing resilience on breaks, so if short would be covering down to $10.48 and even trying the long side of this market.  

Dec. Wheat:  Key support level is from $5.87-$5.90.  Dec wheat prices bounce off $6.00 3/4 initially, but traded down to $5.98 1/2.  If short, would think about scale down covering as the market has had the ability to bounce from $6.00. 

Dec Corn:  Key support now that $4.00 has been broken is $3.89-$3.91.  While prices have broken lower, a close under $3.90 would trigger more fund liquidation and secure a market top. 

DECEMBER CORN

Prices head lower and violate the $4.00 level which also coincides with the 20-day moving average.  Best trendline support on a break-down of $4.00 surfaces at the red line support of $3.91-$3.92, and we are just about there, (the red line pictured drawn off previous lows).  The uptrend is still strong with an ADX of 49, so if short would have to cover from $3.88-$3.95, and keep the rest in case prices can settle under $4.00 for the balance of this week.  The very small gap on a lower trade at the top of the chart is fairly insignificant, but along with the bear flag formation becomes more bearish, which led to the current house-cleaning break.  Would look for a likely $3.95-$4.15 trading range to develop, and the swing point may become $4.05.  A close under the bottom support line would be indicative of a confirmed top.  Since the ADX is so strong, would increase the chance of market recovery despite morning weakness.

TAGS – Feed Grains, Soy & Oilseeds, Wheat, North America