GOOD MORNING,
Prices begin the PM session mixed, led higher by corn with wheat lower, but most are higher heading into the close. The soy complex is firmer led by sharply higher soyoil on the back of higher crude and palm oil prices. Oilshare is back in vogue as traders buy soyoil/sell meal. Bean prices are following soyoil. More export facilities are coming on line in the Gulf, with bids firming indicative of further potential business. US Bean business still remains behind year ago, due to higher freight costs as well as most of the business going to Brazil. However, US beans are still the cheapest globally, and China has fall and winter needs to fill.
Traders are watching for evidence that China could be looking at corn if prices can trend lower. Wheat tenders remain active even as global prices inch higher. French wheat production was lowered as they also have quality issues. Stats Canada lowered their production. Australia is turning drier. Wheat may have a reason to now stay in its current trading range, as it could be value.
Today is the release of the August NOPA crush report, with advertised estimates at 1.555 bln lbs, vs. 1.617 bln lbs mo ago for soyoil ending stocks. Crush is estimated at 154.18 mln bu vs. 155.10 mln bu in July, and vs. 165.06 mln bu mo ago.
WEATHER
--Tropical storm Nicholas is dumping rains across the southern areas. While the storm is not as bad as Ida, it is a slower moving storm which is dumping rains across water-logged New Orleans areas. There will be scattered rainfall across the Midwest, but conditions are forecast to stay warm and dry. Rain will remain in the far south, Ohio Valley and north.
--Globally, Brazil has been sitting well below normal for some time with the best rains called for in the 11/15-day time period.
DELIVERIES
beans: 1
soyoil: 80
corn: 17
Chicago wheat: 3
KC wheat: 1
ANNOUNCEMENTS
Argentina's corn production is expected to hit a record 55 mmt for 21/22, as announced by the BA grains exchange, perhaps at the expense of 21/22 beans.
European gas prices are surging on tight inventories heading into the winter, incentivizing power producers to switch back to coal and industrial users to consider temporary plant closures.
Brazil's farmers in the second largest planting state of Parana are now 1% complete for planting the 21/22 bean crop.
CALLS
Calls are as follows:
beans: 5-8 higher
meal: mixed
soyoil: 60-80 pts higher
corn: 3-5 higher
wheat: 2-4 higher
OUTSIDE MARKETS
A mixed stock market, which was higher overnight but begins lower this AM. Crude oil rallies to $71.63/barrel. The US dollar trades down to 92.43.
TECH TALK
- November beans continue to push sideways, but the momentum lower now seems to be stalled as prices begin to base sideways. The 200-day moving average, which is a strong indicator of market strength or weakness, stands below the market at $12.65. The ADX is weak at 11, meaning prices perhaps chop sideways. On current strength would look to likely test $13.05 sooner rather than later, and any trade above will suggest we have a base of trade to rally from.
- The Dec meal chart is also sideways with very clear boundaries from $335.00 up to $365.00. Would look to price on pullbacks towards $335.00 should we go there and given the spread activity and tendency for this market to fail on rallies we likely can.
- December soyoil trade is strong, but the rally to 58c merely gets us back in stable territory. Trade above 58c will target further highs, as there is not much back resistance to stop a climb higher. Would look for 55c to 60c as a comfort range, swinging around the 58c areas.
- December corn makes its way back towards key resistance from $5.25/$5.28 in a surprising show of strength. Prices are now trending up and away from the 200-day moving average which is $5.07, and towards the top of a downtrend channel. The market remains well bid at this point but could find resistance tough to overcome.
- December wheat prices moves back over $7.00 and into first resistance at $7.08. The potential here is for prices to eventually re-test the neckline of the topping formation at $7.20, as we appear to now confirm a $6.80-$7.20 trading range.
DECEMBER CORN
Prices reached a blow-off low on the report at $4.97 but is now trending slowly higher. Prices are also above the 200-day moving average again of $5.07 1/2. Rising above strong moving averages such as this is triggering more buying activity and further strength. Key resistance is $5.25/$5.28, (top of a downtrend channel), but the move up and higher has to come from a push through the channel. While prices may trend towards the top of the channel at $5.28/$5.30, may be tougher to go beyond. Look for a likely $5.05-$5.25/$5.30 trading range to develop.
TAGS – Feed Grains, North America
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