World Perspectives
feed-grains

AM Outlook - Demand Day

GOOD MORNING,

Prices were higher at the start of the PM session with beans and soyoil in the lead to the upside.  Global vegoil prices remain lock-step in the plus column as energies work to new highs.  Canola prices are once again sharply higher on poor Canadian weather. Matif/Canada rapeseed futures are higher.   Beans pop to the upside with meal prices still struggling.  Wheat is still in the process of price congestion, but hasn't given up on its bull flag formation yet.  Corn is tightly congesting between recent highs and lows.  Corn prices are firmer with Matif futures higher on the slow EU harvest.  Brazil may also be close to being sold out of corn. 

China returns from holiday, and perhaps they are in the buying mode, with chatter that inquiries have been made, particularly for corn. The US and China will be holding trade talks, as China remains well behind on what they have agreed to purchase via the Phase One trade deal.  Gulf loadings are improving, now estimated to be 90% of normal mid-month, which could entice China to begin to purchasing more.   

Demand remains somewhat behind, though export sales yesterday were good.  Total weekly export sales were double what was expected in corn, with beans also at the top end of ranges.  Wheat, on the other hand, is expensive now vs. other origins, so could be part of the reason for the lag in price action lately.  

US domestic margins are very good, and therefore domestic buyers are beginning to bid up the market as they are struggling to purchase new crop supplies.  US crush firms to new highs.  

WEATHER

--Areas of the Midwest continue to see showers in the eastern Corn Belt.  The 6/10 day and 8/14 day outlook features well above normal temperatures with precip events continuing.  A rain event will move down from Canada across the northern plains this weekend, and there could be additional coverage in parts of the central and eastern belt.  This system could move into the southern plains early in the week, with a second system coming into the plains and western Corn Belt as the ECB dries down.  

--Brazil's weather remains beneficial, with Argentina too dry and cold.  NOAA continues to show the threat of a La Nina event in SA, particularly for Argentina and southern Brazil.

ANNOUNCEMENTS

Brazil's bean crush for August totaled 3.3 mmt, down 3.3% from August 2020, while Jan-Aug crush totaled 26.6 mmt, down 1.5% according to Abiove.  The reduced crush is attributed to the gov. lowering its biodiesel blend mandate from 13% to 10%.

CALLS

Calls are as follows:

beans:  8-10 higher

meal:  .40-.80 higher

soyoil:  40-60 pts higher

corn:  1 1/2-2 higher

wheat:  2 1/2-3 higher

OUTSIDE MARKETS

Firmer crude which trades up to $79.50/barrel, and a firmer US dollar at 94.25.   Stocks are 20 pts higher.

TECH TALK

  • November bean prices work higher and over recent tops at $12.50/$12.55.  The turn higher from lower may be enough to invite further pre-report short-covering.  If pullbacks can hold, would look for further upside towards $12.65/$12.70.  
  • Dec soyoil strength is the feature here today, as prices pop into new highs on continued fund buying and chart strength.  As noted before, the Dec. soyoil break-out level was 60c, and bull markets usually walk back once they have made a new high to test break-out levels.  The 60c level held and now the market works to new highs over 6250c.  Look for the possibility of moving the bottom of the trading range up from 55c to 58c for a 58c-64c trading range.  
  • December meal prices fell to a new low of $319.00 on continued buy soyoil/sell meal trade.  Trendline support is now at $315.00 given the break-down to further new lows.  The meal market is oversold at 27% RSI, but can drive into an 18% oversold situation before it has to correct.  Top of the meal market now falls to $325.00 as meal prices trend down.  In the meal bears favor, the ADX for meal is strengthening at 19, meaning rallies will continue to be selling opportunities.
  • December corn prices continue to work sideways in the same vicinity from $5.27-$5.48.  Resistance looks stronger than support, as the market has had a tendency to break its bid as of late and head lower.  The 100-day moving average is $5.17, and for now would expect $5.15-$5.20 to be a strong base of support should we go there.  
  • December wheat makes a new low for its bull flag formation at $7.38, and would need for prices to break $7.30 to negate the positives of such a chart formation.  Markets can enter into 1-2 weeks of price congestion before resuming a prior uptrend.  Would look for prices to remain congested between $7.30-$7.60, with the only item fighting higher prices a weak ADX trend reading of 15.

NOVEMBER BEANS

The lows of $12.31 have been established now for one week, and though it is not enough to say that seasonally we have posted the bottom it is a good start.  The chart is still showing a weak trend of 15 ADX, meaning we are probably going to go sideways for a bit into the October report next week.  Would look for prices to perhaps trend towards the 200 day moving average of $12.80//$12.83, but think given the recent low this is now the established top of the market.  Given the structural weakness and new lows, the rally may not even get to $12.80, finding resistance at $12.65/$12.70.  

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Infrastructure investment due diligence

On behalf of a Canadian oilseed processer WPI's team provided market analysis, econometric modeling and financial due diligence in support of a $24 million-dollar investment in a Ukrainian crush plant. Consistent with WPI's findings, local production to supply the plant and the facility's output have expanded exponentially since the investment. WPI has conducted parallel work on behalf of U.S., South American and European clients, both private and public, in the agri-food space.

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