GOOD MORNING,
Prices begin on a firmer note this morning but not very far away from yesterday's lows. The trend continues to be lower for grains, resulting in the soy complex being pressured to the lowest end of its trading range for beans and meal. Soyoil continues to hold its own against meal, while January beans head closer to the $9.00 benchmark on more disappointment over the lack of clarification for trade negotiations. Good South American weather and ideas that 2020 may offer more production continues to cap off rallies. Without a trade deal or a South American weather problem, the path of least resistance remains lower across the board, and sideways for soyoil.
In terms of trade news, one news-wire asserts that the Chinese government has transferred some tariff free quotas away from foreign-owned importers and into privately owned domestic crushers. Only about 5 mmt of the 10 mmt of the most recent tariff free import allocations had been used up, and the Chinese government is seeking to speed up the balance of those purchases.
Crop Progress
Corn: Harvest is now at 76% of the US crop collected vs. 89% year ago, and vs. 92% average, advancing the expected 10% WOK, which is 13% last year and 16% behind average. The report implies that there are 20 mln acres left to be harvested, including over 4 million acres in the Dakotas, 2 million in Illinois, and 3 million in Iowa.
Beans: 91% harvested vs. 85% week ago and 91% expected.
Winter Wheat: 95% complete vs. 92% week ago and 92% average. Emerged: 83% complete vs. 78% year ago and 80% week ago. Conditions: 52% good/excellent.
WEATHER
Temperatures warmer but wetter in areas that are already running behind. Only NE Brazil remains too dry and not where a majority of corn or soy is grown. Argentina continues to improve, leaving the ability to stay on track for record crop production. Weather leans bearish for the moment.
ANNOUNCEMENTS
Corn exporters looking to secure supply to fulfill outstanding export commitments may be forced to switch to Parana as the largest corn producing state in Brazil vs. Mato Grosso as supply runs low.
CALLS
Calls are as follows:
beans: 2 1/2-3 higher
meal: 80-1.00 higher
soyoil: 15-20 higher
corn: 1/2-1 higher
wheat: 1/2 -1 higher
OUTSIDE MARKETS
Outside markets feature a weaker crude oil market, trading down to $56.15/barrel, and a firmer US dollar that trades up to 97.88. The Dow continues its record trade and is up 50 pts this morning with a high of 28,128 pts.
TECH TALK
- Jan beans post new lows for the move at $9.10, which is a double low and has to verify that it can stand. Very good resistance has now formed at $9.18 1/2 to $9.19, which for the day is the 200-day moving average and top of the current downtrend channel. New sellers and old bulls may want to sell should we get up there.
- Dec soyoil has the most constructive chart trade by moving over recent tops from 3075c/3080c, implying that a 31c test is doable, and we likely go there.
- Dec meal showed its technical trading range in one day of trade breaking from highs close to $308.00 down to $301.00, which held again.
- March corn hit its first target level low at $3.78, which was a break-out level that sponsored the fall rally. Double lows form today, but resistance has moved down to $3.81/$3.83 with the downside print.
- Dec wheat congests from $5.00-$5.10, bouncing off the converging lines of support under the market, which offered up support. Prices begin higher, and should find some retracement interest to the upside towards resistance that has now in most cases been lowered.
- In order to stabilize charts, prices have to trade back over $3.83 March corn, $9.20 Jan beans, $5.15 Dec wheat, and 31c Dec soyoil.
Lower target ideas:
Jan beans: $9.00
Dec meal: $299.00
Dec soyoil: 30c
March corn: $3.70
Dec wheat: $4.98
JANUARY BEANS
Overall trading range has been adjusted lower, and could eventually target $9.00. A new downtrend channel has formed and with it fortified lower resistance, which now crosses at $9.18/$9.19 or the 200-day moving average resistance line and top of channel meet. A move to the upside of $9.19 would therefore stabilize price action and put into play the previous $9.10-$9.35 trading range.
The downtrend is fairly weak and the market is verging on oversold at 39%. Could sell the market on a bounce towards $9.18/$9.20, but would have to have a tight buy-stop near by a close over this level turning prices sideways from lower. Would prefer to scale-down cover with a further break towards $9.00-$9.10 in the event that something new develops as far as trade war negotiations go. Probably have to factor back some weather premium as well, which has virtually disappeared given the break in prices recently.
TAGS – Feed Grains, Soy & Oilseeds, Wheat, North America
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