GOOD MORNING,

Prices closed on a firm note and extended gains once more overnight as funds now establish long positions across the board.  November beans hop over the $10.00 mark to achieve a new contract high, and December corn breachedver the $3.70 level.  Though the USDA did not lower corn and bean production/yield estimates as much as expected, traders are obviously looking for further reductions in the October report.  On the bear side, corn production is still among the highest levels ever at 14.9 bln bu.  On the bull side, bean ending stocks were 25% lower, and China demand continues to underpin prices.  Strong palm oil prices and vegoil demand pushed December soyoil to new highs as well over 34c.  

WEATHER

--Tropical storm Sally is in the eastern Gulf of Mexico and will become a hurricane Monday while approaching the southwest Louisiana coast.   The 6/10-day and 11/15-day forecasts lean wetter, which will delay early harvest in areas.  

--World weather SA, EU, and Black Sea remain warmer and drier for the next 10/12-days with excess moisture in NE China with reports of corn and beans damaged due to flooding. 

REPORTS

Prevent plant as of Sep 1, 2020…

corn:  6.077 mln vs. previous at 5.374 mln

beans:  1.451 mln vs. previous at 1.223 mln

wheat:  1.268 mln vs. previous at 1.194 mln

Failed as of Sep 1, 2020…

corn:  99,691 acres vs. previous at 87,645

beans:  21,208 acres vs. previous at 16,650

wheat:  455,390 acres vs. previous at 421,198

Commitment-of-Trader's report disaggregated futures /options combined:

beans:  net long 173,907

meal:  net long 32,119

soyoil:  net long 85,299

corn:   net long 33,494

wheat:  net long 23,175

Funds are holding their biggest long position in two years, with hedgers at their shortest level since 2012.  

ANNOUNCEMENTS

Brazil's Foreign Ministry announced they have extended their tax-free ethanol import program for US biofuels for another 90 day starting Sep. 14.

Brazil's Datagro estimated 20/21 bean crop at 46.7% forward sold, a record volume and well ahead of the 24.5% noted year ago. 

China's Ag Ministry increased its 19/20 and 20/21 marketing year corn import projections.  The 19/20 increase was to 7.0 mmt, up 1.0 mmt vs. August, and 20/21 was increased to 7.00 mmt from 5.00 mmt.  They noted an expected increase in US corn imports for those periods.

China's Ag Ministry forecasts 20/21 corn production at 265 mln mt, down 1.8 mln mt vs. August. 

China banned pork imports from Germany after it confirmed its first case of African Swine Fever last week, which is its third largest supplier.       

Ukraine's 2020 export prices for 12.5% protein milling wheat rose by $6-$7/ton over the last week due to high demand from importers and worries over a delay in winter wheat sowing, as reported by APK-Inform agriculture agency.  Russian wheat export prices also rose for the third week in a row, supported by strong demand from major importers such as Turkey, as reported by IKAR. 

DELIVERIES

beans:  2

soyoil:  98

meal:  29

wheat:  24

CALLS

Calls are as follows:

beans:  2-4 higher

meal:  mixed

soyoil:  45-50 higher

corn:  1 higher

wheat:  1/2-1 higher

OUTSIDE MARKETS

Outside markets include a weaker crude oil market, which trades to $36.85/barrel, and a weaker US dollar at 92.98.  Equities are 268 pts higher.  OPEC now estimates 2020 global economic contraction at 4.1% from 4.0% previously, but kept their 2021 worldwide economic forecast unchanged at 4.7%. 

TECH TALK

• The November bean market continues to methodically place new highs after continuing to close well on a day-to-day basis.  Charts are overbought at 84%, warning that a setback is close.  However, once beans head past a major benchmark such as $10.00, it can typically add another 35c before entering into a very good round of profit-taking.  Therefore, would look for an eventual target high of $10.35.  The adage "new highs beget new highs" applies.   
• December meal sprints to new highs leaving an opening gap in the first few hours of the PM session from $325.10 to $325.40, which fills during the morning.  Target high moves back to $330.00 to $335.00, but Dec meal is now back below resistance at $327.00 to $328.0.  
• December soyoil moves to new highs over 3404c, setting its sight for 3450c target high.  The pennant formation that occurred before the move was friendly, and the exit to the upside confirmed as more bullish price action takes place.    
• December corn moves over $3.70 to what is probably going to be a $3.75/$3.77 top.  Target highs over $3.80 target $3.88.  
• December wheat prices slip below $5.40 to $5.39 3/4.  However, the last few times this market threatened to break below the $5.42 level there was no downside follow-through, but a good upside correction.  Could own the market against $5.35 for a $5.30-$5.65 trading range.  

DECEMBER CORN

The trading range continues to move higher with prices clearing $3.65 to trade just over $3.70/$3.73 which is major resistance.  The uptrend strengthens with an ADX of 33.  Would look to own pullbacks and good support moves up to $3.55/$3.61 from levels that were $3.45/$3.48.  Top tier target now moves back to $3.88.  However, the pull higher has been more muted for corn than beans.  Would look to enter into a likely $3.55-$3.75 trading range, and for the market to find more fund buying if $3.80 is cleared.  

ON THE CALENDAR

Export inspections at 10:00, crop progress at 3:00 central time.  Advertised expectations are for crops to decline by 1%.

 

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