GOOD MORNING,

Corn prices were mixed yesterday but all other markets put in better trade, each for different reasons.  Corn struggled as new deliveries hit the market along with an ethanol stocks build.  Despite the weaker technical trade, corn appears to be heading into a sideways range for a bit.  Lower corn prices may hold as South America appears sold out of corn, leaving Ukraine as the largest competitor.  A more interesting development for corn is that drought conditions in one of Mexico's key corn producing regions could slash production and trigger more 2020 corn imports.  Mexico has always been a good customer for the US, and supply shortages have always been net positive.  According to Mexico's Grupo Consultor de Mercados Agricolas, total corn imports into Mexico are expected to rise to 18.3 mmt in 2020, up 14% from 2019.  

Beans found support from a highly oversold market and stock market gains on the back of encouraged reports that a phase one agreement could be completed ahead of the Dec 15 tariff deadline.  Wheat futures found a bit of support from a weaker US dollar, which traded down to a 4-week low yesterday, (traders also buying crude/selling the US dollar), as it is price positive for US wheat exports.  There were some reports that Iraq planned to import 750,000 mt of wheat during 2020, which is additional evidence of global demand prospects for next year, particularly with diminished supply from Australia.  Soyoil futures derives support from higher energies and 2-year highs in palm oil, posted in Wed. session.  All these markets are firmer this morning on technical follow-through from yesterday's activity.

On the trade front, China stated today that in order to reach a phase one agreement the US needed to lower tariffs on Chinese goods.  Yesterday, Bloomberg News reported that US negotiators expect a "Phase One" deal completed before US tariffs are set to rise on Chinese products on Dec 15.

WEATHER

Neutral weather continues across Brazil, but Argentine patterns are trending on and off dry.  US weather has quieted substantially, but harvest delays will still linger in the northern plains.

REPORTS

Export sales:

Beans:  2019/20 net 683,800 mt (vs. an expected 700 kmt - 1.2 mmt, down 59% from the previous week and 55% from the prior 4-week average, increases primarily for China).

Meal:    2019/20 net 181,100 mt  (vs. an expected 100-300 tmt)

Soyoil:   2019/20 net 10,800 mt (vs. an expected 2-25 tmt)

Corn:    2019/20 net 546,100 mt and 2020 net 2400  (vs. an expected 500-850 tmt, down 32% from the previous week and 18% from the prior 4-week average)

Wheat: 2019/20 228,100 mt  (vs. an expected 350-700 tmt, down 63% from the previous week and 45% from the prior 4-wk average)

U.S. export sales this morning were negative, coming in at the lower end of expectations for all the markets.   Wheat sales were very poor with the Black Sea still taking the majority of the business.  Corn sales were disappointing as well, with Ukraine still a major competitor.   

ANNOUNCEMENTS

IEG Vantage 2019/20 forecast:

• Australia wheat at 15.85 mmt, and the 2019/20 Russian crop at 76.0 mmt.  Would note that all of Australia received less than 1.9" of rain in November, with parts of the west coast receiving less than 1 mm.  Dry weather is expected for the next three months.
• Brazil corn at 103 mmt, which includes 27 mmt of early season corn.
• Argentine corn production at 46.0 mm  
• Argentine bean production at 52.5 mmt, with Brazil beans at 124.5 mmt.

DELIVERIES

Soyoil:  860

Meal:   148

Corn:   129

KC wheat:  1

CALLS

Calls today are as follows:

beans: 1/2-1 higher

meal:  mixed/lower

soyoil:  20-25 higher

corn:  1/2 lower

wheat:  1 higher

OUTSIDE MARKETS

Outside markets feature a firmer crude oil market, trading up to $58.85/barrel, and a weaker US dollar which trades to 97.46. The Dow is up 90 pts.

TECH TALK

• Jan beans pushed through trendline resistance over $8.80, which continues a corrective pattern higher.  The market low of $8.67 1/2 could stand for a bit.  In the big picture, the chart still remains oversold and pullbacks towards $8.72/$8.75 may hold for a continued correction phase.  
• Jan soyoil prices stage a rally off 3012c-3015c to test upper resistance at 3080c but needs a trade over 3085c to target 31c again.  Overall it appears the chart is ready to head into a 30c-32c trading range with the downside correction complete.   
• Jan meal works out of contract lows of $292.60, but in the big picture, it has not moved very far away from them.  Prices for Jan meal have to trade back over $299.00 to gain more traction to the upside, but at some point this market needs to trade back over $300.00 for a $292.00-308.00 range.   
• March corn cracks $3.80 to test the base of support at $3.77.  Since there are multiple lows at $3.77, a break of this level takes us to $3.74 which should hold for a temporary low.  
• March wheat bounces off key support at $5.22, which is an important pivot point in a wider $5.05-$5.45 trading range.  

Major levels of resistance today include:

Jan beans:  $8.86/$8.88

Jan meal:  $299.00

Jan soyoil:  3085c

March corn:  $3.81

March wheat:  $5.35

Could sell against these levels for a day trade but must have close buy-stops as a rally over would trigger more short-covering or buying.  

MARCH WHEAT

Major direction is sideways/higher in a wider trading range that extends from $5.05 up to recent highs of $5.46.  The market corrected back to the halfway point of $5.22 and has held this critical level so far.  Trendline resistance still is strong at the top, crossing at $5.48 if we follow the pattern higher.  If short, need the chart to break the $5.22 level in order to trigger sell-stops that would result in a break to $5.05, where crossing trendlines converge with moving averages to offer very strong support.  Given that the primary angle of the chart is higher, buying breaks at this moment still seems prudent for another possible test of upper trendline before we hit a sell seasonal signal at the end of December.  

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