World Perspectives
feed-grains

AM Outlook - Exiting Some Longs

GOOD MORNING,

Prices are lower across the board on more fund selling as weather moving forward continues to favor a good pace of harvest.  Outside markets are lower, so there seems to be a macro-influence here along with harvest pressure.  Crude oil prices are lower as world stock markets trade down. The US dollar trades to new monthly highs as it is seen as the safe haven, which is also price negative for Ags this AM.   Concerns over China's property developer Evergrande's solvency spooked equity markets even as traders brace for more tapering comments from the Fed. 

World vegoils are trading weaker together with crude, palm, and canola prices lower.  December soyoil trades downward taking beans with it. Egypt is in for 30,000 mt of soyoil and 10,000 mt of sunflower oil.  Corn prices are lower with spreads widening as harvest expands.    

Barge freight continues to move higher, as the wait time to load and unload barges in New Orleans continues.   Further complicating matters is that harvest will begin sooner rather than later for northern areas where dryness has sped up crop maturation.  The problems in the Gulf may imply that purchasers may turn to other origins to source corn, namely Ukraine which is competitive. 

WEATHER

--Scattered showers were noted over the weekend across the central Midwest while the south continues to see heavy rains across the New Orleans areas.  Drying does continue across the plains, and ongoing drought continues in the northwestern Plains.  

--Weather in SA will be close to normal for this time of the year.  Russia's wheat areas are seeing good rains which will help emergence.   Gist of the weekend weather outlook is bearish.  

 REPORTS

Commitment-of-Traders report, disaggregated futures / options combined:

beans:  net long 55.3K

meal:  net short 8.5K

soyoil:  net long 47K

corn:  net long 212K

wheat:  net short 11.1K

Long positions continue to be reduced with new shorts in the bean market.  Corn length remains the most steady.   Length is adding to a negative day of trade.  

ANNOUNCEMENTS

Brazil's IMEA projected 21/22 bean production at 37.4 mmt, up 3.8% vs. prev. season.  Planting was said to be 0.3% complete, about average.  

Chinese customs estimated August 2021 corn imports totaled 3.23 mmt, up 221% from year ago, which brings the year-to-date total to 21.4 mmt.  They forecast August total bean imports at 9.49 mmt vs. 9.6 mmt year ago, of which 9.04 is from Brazil, and only 17,575 mt from the US.

Russia's Sep. exports of wheat, barley and corn are estimated at 5.0 mmt vs. 4.6 mmt in August, as announced by SovEcon.  Russian wheat prices rose for the 10th consecutive week.

CALLS

Calls are as follows:

beans:  14-16 lower

meal:  2.80-3.50 lower

soyoil:  80-90 pts lower

corn:   10-12 lower

wheat:   8-10 lower

OUTSIDE MARKETS 

A still firming US dollar, which creeps higher as the Fed taper looms.  Stocks are 630 pts lower.  Crude oil trades down to $70/barrel, with the US dollar trading up to 93.45.

TECH TALK

  • November bean chart is trading sideways/lower, and is now at the bottom of the recent trading range, with prices sitting atop the strong 200 day moving average which crosses at $12.65/$12.66.  All in all, prices are trading in a descending triangle, and each successive rally peak has been lower than the next.  Trade through the 200-day moving average at $12.65 would show that the market is very weak, and would bring in more sellers and a push to the bottom of the descending triangle which today is located at $12.50.  
  • Dec. meal is a $335.00 - $365.00 market.  Though prices attempted to define better support at $340.00, we are through this level once again and under the 100-day which is located at $345.00.  As such, prices could trend down towards the lower end of the price action at $335.00, and end-users can be patient.  
  • The December soyoil chart now tests recent trading range lows at 55c, and trendline support does not emerge until we reach 5450c/5480c.  On technical weakness, we could go there, but would think about pricing or covering a partial short if we do.  Though prices are correcting, this market still shows a tendency to rally sharply off its lows.  
  • December corn chart 200 day moving average is $5.08, and on a turn lower from the recent top at $5.37 there is not much reason we cannot get there.  There is not much visual support until we do reach this moving average, though prev. key support levels include $5.15 and $5.10.  
  • December wheat prices are back under $7.00 once again, but losses here are the least.  Prices trade through the 100-day moving average of $7.02, and therefore could now work down towards the lower end of the established range from $6.75/$6.80.  

NOVEMBER BEANS

The major direction continues sideways/lower, with the recent range from $12.65 - $13.10.  Each peak has resulted in a lower rally high, and prices now trend to test the 200-day moving average from $12.65/$12.66.  The 200-day moving average is a very strong one, so moving through it will unleash more selling which in turn likely takes the market to the bottom of the descending triangle, which is outlined in red, which crosses at $12.50.  On a negative day like today, the push lower is on and we could become a $12.35/$12.40-$12.95/$13.00 market. 

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