GOOD MORNING,
Prices are mixed this morning with more short-covering in beans, meal, and corn, with lower soyoil vs. meal trade. The macro pressure of yesterday is off a bit with a small Dow recovery, while traders continue to monitor currency events in Argentina and China. Argentina's politics and currency will have an impact on beans down the road and could actually become supportive for this market. Other comments from Brazil about possible smaller bean production revisions are adding upside to beans as well.
A good export sales number for meal creates a correction in oilshare. All eyes are also on corn to see if it can begin a corrective phase to the upside. If funds begin to get short and we get a pop next week due to either drier weather or production concerns from the Pro Farmer crop tour, the new corn short may get caught in a bear trap. That would be up to the charts to decide.
WEATHER
The west side of the Corn Belt saw rains in Wisconsin, Ohio, northern Kentucky and southern areas of Indiana and Illinois. This area is mostly dry today/tomorrow, with showers over the weekend. For now, the weather remains non-threatening.
ANNOUNCEMENTS
Ukraine's APK-Inform raised the 2019/20 all grain export forecast to 50.7 mmt vs. 49.9 mmt prior (+0.8 mmt). Corn exports are forecast at 27.5 mmt vs. 26.8 mmt prior (+0.7%).
Argentina's Rosario Exchange forecast the wheat crop acres at 6.87 mmt, 6 percent higher than last season, with production at 21.5 mmt.
Brazil's CONAB forecasting agency said there could be a possible revision to their 2018 and 2019 bean crops coming due to some discrepancies in the private-sector estimates that raised doubts about the official gov’t supply and demand numbers. CONAB's director of information, Guilherme Soria Bastos Filho mentioned a hefty bean export forecast by Abiove is one factor triggering the revision, saying "the balance of supply and demand is tight, and there is no space for exporting 72 mmt of beans this year," according to a story from Reuters.
STORIES
Argentina's presidential contender Fernandez and President Macri spoke and announced their intentions to keep the markets stabilized. Fernandez reiterated that his intentions would be to make sure his policies did not include faulting on their debt. The falling peso could create a situation where the farmer hoards beans rather than bring them to market.
China's finance ministry said it has taken steps to blunt the latest US tariffs on $300 bln in Chinese goods, complaining that the tariffs go against a consensus reached by Trump/Xi at their meeting in Japan this year.
BUSINESS
Egypt tendered for 55,0000 mt of wheat LH Sep. In the last tender they purchased 415,000 mt of Russian, Romanian, and Ukrainian wheat. Since then global wheat values are lower.
Export sales were released and were good for wheat (routine buyers), poor for corn and soyoil, in line for beans, and good for meal.
DELIVERIES
Beans: 143
Meal: 69
CALLS
Calls today are as follows:
beans: 3-5 higher
meal: 20-50 higher
soyoil: 10-12 lower
corn: 3 1/2-5 higher
wheat: 1/2-1 lower
Outside markets are steady with the Dow up 120 pts and crude down to $53.77/barrel. The US dollar is slightly weaker at 97.82.
TECH TALK
- Nov beans continue to tighten into a trading range from $8.75 - $9.00. Very strong lines of support now cross from $8.73/$8.75, while overhead resistance crosses at the 100-day moving average at $9.01. Beans have had the least inclination to want to break to their overall lows at $8.55/$8.65, but since better support has now formed at $8.75 a push through it to the downside would reward the bear. At this point the path of least resistance seems to be up.
- Dec meal prices continue to congest around $300.00, but right now values are sitting close to trendline support at $298.00, and would prefer to day-trade this market from the long side as it trends back and forth in an uptrend channel.
- Dec soyoil congests its large trading range from 2850c to 3025c, breaking the 200-day moving average to trigger trade down to lows at 2937c. Would cover a short if prices work back towards 29c, and think at some point they probably will. For the moment, the market traded down to the next level of key support at 2930c.
- Dec corn is still trying to find its overall low with a trading range low at $3.70. Charts are entering oversold territory, and the chart is posting a bit of congestive trade. The low in May was $3.63 3/4, making the $3.65/$3.70 level a natural area of support to firm from.
- Dec wheat is weaker today, having traded back under $4.80 making it highly likely that we trade back to test recent lows from $4.69 1/2 to $4.71.
DECEMBER WHEAT
Prices are trading in a descending triangle pattern which is typically bearish, with triple tops from $4.81 - $4.82. Lower support for the day on a further break crosses at the previous trading range low of $4.69 1/2. Target lows include the May 16 low of $4.67 1/2, while best lower support crosses in the next several weeks at $4.50-$4.55. The major direction remains lower, and we look to be heading into a $4.65-$4.85 (or lower) trading range.
TAGS – Feed Grains, Soy & Oilseeds, Wheat, North America
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