GOOD MORNING,

The markets broke heavily on Monday and are attempting a recovery trade today.  The only question would be is this a dead-cat bounce after yesterday's aggressive selling?   Many weaker longs were stopped out, and that could be the theme of December, where more traders may decide to cash out on a 20c gain in corn and a $1.00 move in beans.  Funds on Monday sold 13,000 wheat contracts, 27,000 corn, 17,000 beans, 5000 meal, and 7,000 soyoil.  COT positions are below but, with Monday's activity they may now be long an estimated 8K wheat contracts, 257K corn, 200K beans, 74K meal, and 108K soyoil. 

Bean planting is nearly complete in Brazil, and about half done in Argentina.  Better chances for rain will have to help the tough first part of the planting season La Nina conditions, with most analysts taking some production values a bit lower.  One analyst lowered his estimate of the Brazilian bean crop by 2 mmt to 130 mmt vs. the USDA at 133.0 mmt, and corn down 2 mmt to 104 mmt vs. USDA at 110.0 mmt.  This analyst also put Argentine crop production down 1 mmt to 48 mmt vs. USDA at 50.0 mmt.    Around 30-40% of the crop remains stressed, which should keep values supported on the downside break.  

Technically, it was not a good day yesterday as prices moved to what should be trading range lows.  Many of the markets posted an outside day of trade with weaker closes, which should ideally promote follow-through selling. But these have been strong markets, and pullbacks thus far have been met with nervous end-users needing to get something done. Wheat remains the weakest market technically and perhaps fundamentally.   For wheat, negatives were that Australia's ABARE increased their wheat production estimate by more than 2 mmt to 31 mmt, which means more competition for the US.  Russia stated that they would export more wheat despite lower crop estimates.  Wheat struggles and funds are about even here as it continues to be the sell leg of long corn and beans.  Nothing about that seems to change now.  Egypt announced a tender after the close, but it may be Russia that again wins the biz as they come in with the lowest offer.

Traders will continue to assess the demand picture for beans, which appears to have temporarily slowed.  However, the demand picture for beans continues, with USDA’s oilseed crush report for October to be released at 2:00 central time.  Advertised guesses for Oct. crush is 196.6 mln bu vs. 187.2 mln bu year ago.  Ending stocks for soyoil are at 1.91 bln lbs vs. end of Sep stocks at 1.849 bln lbs.  

WEATHER

Better rain prospects for SA is the theme of the week.  There are still sub-soil moisture deficits that have to be taken care of with recent rain systems. However, slightly more precip combined with overbought and heavy markets exacted its toll.   Rains are now more frequent, and will expand into Mato Grosso in Brazil around mid-week.  

REPORTS

Commitment-of-Trader's report disaggregated futures / options as of Nov 24, 2020

beans: net long 203,810

meal:  net long 71,135

soyoil:  net long 105,341

corn:  net long 288,599

wheat:  net long 15,299  

Would note that the fund length in soyoil futures is 21% of the total open interest, which typically makes this market more vulnerable to a setback.  The corn position was larger than expected with funds net buyers last week.  

Crop Progress

Winter Wheat:  good/excellent at 46% vs. wk ago at 43%.   emerged: 92% vs. 89% year ago, and 91% average.  

SRW: improved 1% to 68% good/excellent, 

HRW: Texas up 8% and Colorado, Kansas and Oklahoma each improved 3-4%. 

Note that this will be the last crop progress report for 2020.  The first weekly report for 2021 will be released on Monday, April 5. 

ANNOUNCEMENTS  

US biodiesel production fell to 159 mln gallons in Sep from 163 mln gallons a month earlier, according to the EIA.   Bean oil remains the largest biodiesel feedstock with 737 mln lbs used in Sep., representing about 61% of the total, and vs. August use of 745 mln lbs. 

Ukraine's Economic Ministry forecast total grain exports between July l and Nov 30 at 21.32 mmt, which lags 24.81 mmt year ago.  

China's National Grain Trade Center stated they sold 674,796 mt of wheat reserves offered at an auction last week, which represents 16.8% of the volume offered into the marketplace.

Argentina agribusiness export industry workers unions will begin an indefinite strike.  

CALLS

Calls are as follows:

beans:  1 /2-2 higher

meal:  .80-1.00 higher

soyoil:  10-15 higher

corn:  1 - 1 1/2 higher

wheat:  2-2 1/2 higher

OUTSIDE MARKETS

Feature a higher Dow up 200 pts, with crude slightly weaker at $44.81/barrel, and the US dollar lower at 91.60.  

TECH TALK

Prices begin the day higher, but the tone is cautious after yesterday's break -down.  Best key support for some of the markets is still a bit lower.   

• Jan beans post a new low at $11.66 after setting five tops at $12.00.  The market support really starts however at $11.61, which is the last low posted leading to the rally.  Would look for the possibility that we go there, and the break-down in the chart takes prices out of the previous uptrend channel for a sideways trade.  If short, may want to cover something in scale -down from $11.60-$11.70.  
• Jan meal still holds above $386.00 which is fairly significant, with the 20-day moving average crossing at $389.20.  Prices begin the day above this level, and back over $390.00.  Tops at $400.00 for a week is stiff resistance, but the fact that prices still within reach of the $400.00 is more friendly than not.  Trendline resistance for the day is $394.00, and if we go back over will stabilize beans at current lows.  
• Jan soyoil continues its 37c-39c trading range, coming back from a low trade of 3750c.  If the chart can hold at 3750c think we can rally back over 38c, the midpoint of the range.  Any break of 3750c would now turn prices back to 37c.  
• March corn prices firm off double lows at $4.24/$4.25, and the reversal yesterday could have done its work to show us the overall trading range, with $4.30 as a pivot point in a $4.20-$4.40 trading range.  If prices slip under $4.24, more selling should occur to test $4.20, but think there will be pricing activity, bargain hunting, and short-covering to hold this level of support.  
• March wheat posts an outside day of trade yesterday with double lows so far this morning at $5.84-$5.85.  Prices may build on this level of support, but the overall low is still vulnerable to a further fall towards $5.80 for a $5.80-$6.20 trading range.  

MARCH CORN

The contract high is $4.39 1/2 with an outside day closing lower yesterday, typically a more reliable reversal signal meant to do some needed house-cleaning.   Today offers the chance for recovery trade, but if prices slip through yesterday's low of $4.24 1/4 would look to find prices trading back towards $4.20 where the next best line of support crosses.  The overall trading range is from 4.20 - $4.39 1/2 now, and staying above Monday's low will suggest that prices could head towards the middle of the range at $4.30.  Stronger markets will typically not trade all the way back to trading range lows, and a firmer start may hold.  If bearish, a close under $4.20 is extremely negative, and if long may want to opt out or even try the short side of the market for a larger pullback towards $4.10. At this point, would be more surprised to see a chart price break-down, and would think charts go in for a bit more stabilization, although it may be a slow go.  If traders begin to use small rallies to liquidate, the prices will then head lower.    

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