GOOD MORNING,

The markets are mostly firm this morning after trading mostly higher in the night session.  Dec and Jan meal placed new contract highs overnight, and there are rumors that China purchased both US and Brazilian beans on the break.  Those rumors come despite reports of possible Chinese bean cancellations.  The market is therefore focused on weather and production, and for the moment it is not assured that La Nina has gone away.  Funds are an estimated net long 30K contracts of wheat, 280K corn, 220K beans, 80K meal, and 109K soyoil.  

Corn:  On the bull side is the recovering crude oil market, and lower carry-out as exports remain good and crop size questionable with growing problems around the world.  What could be more problematic for the US corn market is that Brazil is said to be offering for the Feb. time period, and they are competitive.   AgriCensus reported that for the Aug-Oct. period, Mexico imported an estimated 900,000 mt of Brazilian corn, and the outlook for the last two months of the year is additional imports of around 200,000-250,000 mt of Brazilian corn.  Traditionally, Mexico has been a key customer of the US.  USDA forecasts that Mexico will import 16.5 mmt of corn for 19/20, and 17.3 mmt in 20/21.  Corn will remain a follower of beans.  

Beans:  Small carryover and uncertainty of crop in SA is bullish, but trade sources say slowing Chinese demand and a steep collapse in crush margins have created a cancellation of deals for US bean imports for Dec. and Jan.  There are also rumors that China is switching palm oil sales to soyoil, which sent palm oil prices lower yesterday triggering liquidation in oilshare.  This supports meal, which placed a new contract high this morning.  Technically, the soy complex remains well bid as it bounces back from yesterday's losses.  Soyoil prices are higher as well, and could retest contract highs placed recently along with beans. 

Wheat:  Ample carry-over with Russia still a major competitor.  Prices swayed by dry weather in the Plains and export restrictions in the Black Sea.  Russia remains a major competitor and funds continue to use wheat as the sell leg against corn and beans. 

WEATHER

--Brazil is dry but may see some rain beginning today.  There has been scattered rainfall in Argentina today.   The key to how these rains impact the market is whether major growing areas such as Parana and Mato Grosso see them.  Best rain event is Dec 4-8.  The week after Thanksgiving offers up the chance for precip as well.  The market is focusing now on Brazil, which did not see any rainfall.  Weather remains friendly for this trading day.

ANNOUNCEMENTS

Brazil's Deral says that 6% of the bean crop is in flowering stage vs. 11% year ago.

The Sovecon ag consultancy said it raised its forecast for Russia's 20/21 wheat exports by 1.0 mmt to 40.8 mmt due to a higher crop estimate and a high pace of exports.  The new forecast is only 100,000 mt below the record wheat exports experienced by Russia in the 17/18 marketing season.

Ukraine’s 2020 grain crop could decrease to 65 mmt from a record 75 mmt in 2019. 

Chinese customs data for Oct. 2020 indicates bean imports at 3.4 mmt vs. 1.147 mmt.  Oct. imports of Brazil beans by China was 4.233 mmt, up 11% over year ago.   

CALLS

Calls are as follows:

beans:  2 1/2-3 1/2 higher

meal:  3.00-3.50 higher

soyoil:  40-45 higher

corn:  mixed/firm

wheat:  1/2-1 higher

OUTSIDE MARKETS

Still in the green, with crude trading up to $45.72/barrel, new market highs, while the US dollar weakens to 91.94.  The US dollar is at 30-month lows, and crude is at the highest level since last March.  Equities are down 60 pts.  

TECH TALK

• Dec meal posts a new contract high at $402.40 with Jan meal finally staging a rally over the $400.00 to new ctr highs as well at $401.30.  Jan meal losses were never below the $390.00 level on the Tues. pullback, signaling that higher trade would be coming.  Target highs for Jan meal move back to $405.00.  
• Jan beans come back from a drop to trendline support at $11.75.  The break in the market tests $11.75 twice now with an excellent comeback.  Look for the resiliency of this market as a sign that higher highs could be coming.  Target highs for Jan beans are still $12.20, and with prices so close would look to test $12.00 at the open.  
• Jan soyoil is in a range from 37c-39c and is back over 38c once again.  The bounce off 37c was extremely constructive, as weaker markets don't bounce.  Target high is still 3950c-40c.  
• March wheat prices turned higher from lower, with the trade back over $6.10 top leading to a better rebound towards $6.25/$6.30.   
• March corn prices hold major support at $4.23 to trade back towards recent double tops at $4.35 3/4 but is clearly finding some selling pressure this morning.  Nonetheless, any trade over $4.35 3/4 will target $4.40.  

MARCH CORN

The overall trading range for this market is from $4.23 up to double highs of $4.35 3/4.  The price pattern has been to pullback and then head higher again.  As the market does so, it creates layers of trendline support at the bottom of the chart.  The ability of the market to come back from losses remains more bullish than bearish, and if the market can top $4.35 3/4 there is not much back resistance to stop a rally towards $4.40 - $4.50.  Since the major trend is higher, it does favor an eventual break to the upside of $4.35 3/4, and would continue to buy breaks for this possibility.  Trading range for now is $4.20-$4.35.

ON THE CALENDAR

EIA report will be released today, with advertised expectations for production and stocks to be up 1%.  Market closes at regular time, no night session, and a hard open Friday with a close at 12:05.  

 

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