World Perspectives
feed-grains soy-oilseeds wheat

AM Outlook - Looking Lower

GOOD MORNING,

Prices continue to trade on a mixed note, with bean prices mostly responding to good growing weather in Brazil and Argentina, which assures 2020 supplies will be ample.  Wheat saw support from ideas that China may want to lock down imports in lieu of Australia's lower production this year.  Chicago and KC wheat prices were firmer Monday, with Minneapolis trying to follow.   Other reasons for the wheat rally could include the fact that world values were firmer for a second week in a row, with Russian wheat offers higher on export demand.  There is also some chatter about a decrease in planted areas in western Europe, with the US planted areas falling as much as 10%.  Argentina quality issues also remain.  This morning wheat is lower as the gains were probably too extensive given the light holiday volume environment.  

In the back and forth of trade negotiations, the Chinese ministry reported that Vice Premier Liu He and other senior officials spoke by phone with US trade Rep. Lighthizer and Treasury Sec. Steve Mnuchin discussing core issues and came to a common understanding in resolving relevant issues.  

REPORTS

Crop progress was released after the close and came in about as expected, though corn harvest continues to fall short:

Corn:  84% harvested advancing 8% WOW.  Northern plains remain behind the eight ball, with Michigan only 56% complete, North Dakota 30%, and South Dakota at 68%.  The numbers imply that there are 13 million acres left to be harvested, or about 2 bln bu.  

Beans:  94% harvested vs. 91% week ago and 94% year ago.  

Winter Wheat:  52% good/excellent, with 87% emergence vs. 85% year ago and 90% average.  

WEATHER

Midwest weather features a pair of storms that could dump snow from Colorado through Nebraska, Iowa, the Northern Plains and the upper Midwest later this week.  This could hamper harvesting of crops in regions that are already further behind, which is supportive for wheat and corn.  Weather in South America remains good and Brazil/Argentina are on pace for a record crop year unless the dry pattern begins to emerge again.  

ANNOUNCEMENTS

Brazilian farmers approach the final stages of bean planting for 2019/20, with 79% of field work finished as of Nov 21, according to AgRural.  

Safras & Mercado forecasts 2019/20 corn planting in Brazil at 84.2% of the estimated area of 3.936 mln hectares as of Friday.  Corn planting in Rio Grande do Sul is 100%.  Corn planting in Mato Grosso do Sul reaches 76%.

CALLS

Calls today are as follows:

beans:  1 1/2-2 lower

meal: .20-.30 lower

soyoil:  15-20 lower

corn:  1 lower

wheat:  2 1/2-3 1/2 lower

OUTSIDE MARKETS

Outside markets features firmer crude trading to $58.35/barrel, and a weaker US dollar at 98.26.   The Dow is up 24 pts. 

TECH TALK

  • Jan soyoil leaks lower, which is beginning to confirm a head and shoulders top.  The neckline at 3050c is now broken, which could lead to a 30c target low, (or lower if it's not a failed head and shoulders), for a 30c-32c trading range.  
  • Jan meal prices test lower support at $300.00, with any trade under this level suggesting prices could trend down towards $295.00, with little back support to stop such a slide.  
  • Jan beans follow weaker soyoil prices, with new lows at $8.91 1/4.  The primary formation guiding prices is a downtrend channel, and bottom of channel crosses for Jan beans at $8.89-$8.90.  Prices are driving into oversold status of 30%, suggesting that the market may have to do some housecleaning.  
  • March beans post double highs at $9.16, which now turns into resistance with what appears to be a potential $8.95-$9.00 low.  
  • March corn continues in a tight congestion range from $3.77-$3.83 3/4, but sideways trade at $3.77 has held tight.  Major direction is sideways, but the pattern has been to trend lower after market stabilization.  
  • March wheat breaks out to the upside and over previous tops of $5.22 which runs the market into highs near the October levels from $5.35/$5.37.  Good lower support moves up to $5.18 from $5.11, and think that $5.18-$5.22 cushions a setback as the market moves into a broad $5.00-$5.35 /$5.40 trading range.  

JANUARY SOYOIL

The chart formation is bearish and is still appearing to be a head and shoulders top, suggesting that prices could begin to setback towards the 30c level minimally, or target lower moving averages which cross from 2970c-2980c.   The overall implication of the trade for right now does favor a break to 30c.  The pattern shows a left and right shoulder with the head taking prices up to peak highs at 3212c. If still bullish, could initiate a long if the market trades to 30c for a 30c - 32c trading range with tight sell-stops close by.   The chart still needs a close 3% below the neckline of 3050c to confirm, which it so far has yet to do.  

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