World Perspectives
feed-grains soy-oilseeds wheat

AM Outlook - Position Leveling

GOOD MORNING,

As we head into Friday's report, expect to see more position-evening from corn and bean bulls who have put a good rally in their pocket.  More defensive plays have been noted in beans where put buying has been an overall strategy.  This morning, beans are firm along with meal, as the market continues to digest Chinese buying activity.  There are reports that China's state-run companies are buying US beans to build food reserves.    Soyoil is lower following a sharply lower palm oil market.  

Wheat values are still maintaining a technical posture having reached a peak high in the Dec. contract at $5.78 1/2 before setting back.  Wheat supplies are stabilizing as Australia's ABARE increased production estimates, while Argentina's BAGE reported higher production in Argentina.  The wheat section of the USDA WASDE this Friday looks to leave either world or US ending stocks mostly unchanged.  

Corn values are slightly lower but still sit just under moving averages, which is more constructive than not as funds look to possibly build a small long position.   China continues as an active buyer of US corn.  Concerns are mounting over the sufficiency of China's grain supply after three typhoons hit the country's main corn-growing region in quick succession over the last two weeks, which pushed Dalian prices to the highest level in five years.   

In other announcements, the Trump administration has instructed that dozens of oil refiner requests for retroactive waivers from US biofuel laws be denied amid concerns the issue could cut into his support in the Farm Belt.  The move, in the form of direction to the EPA, marks the end of an effort by the refining industry to come into compliance with a January court decision that ruled the Trump administration should not have given out some waivers in the prev. years. 

WEATHER

--The first cold air of the fall crosses this week with pockets of freezing in the Dakotas.  Northern Plains and Wisconsin will see falling temperatures tonight.  Rains are now falling throughout the Midwest, with rains crossing Chicago's LaSalle Street and beyond, and into Missouri bringing relief to dry crops in those areas.  However, there is not much rain for other parts of the country in need of relief over the next few weeks.  

--Rains over the last 10-days have helped Argentina's drought-hit wheat crops, and helps in terms of corn planted areas later this month.  

REPORTS

Crop Progress:

Corn:  Down 1% to 61% good/excellent, as expected, vs. 55% year ago.  States that were showing the largest declines were, (to no one's surprise), Iowa and Indiana, each down 2%.  Crops in Ohio and Michigan fare better.   Dough stage:  97%, Dented:  79%, which is 8% ahead of normal and 28% ahead of 2019.  Mature:  25%.  States such as Michigan, North Dakota, Ohio and Wisconsin were all less than 2/3rds dented, implying crops in those states would benefit the most from late season rains.

Beans:  Down 1% to 65% good/excellent.  Dropping leaves:  20% complete vs. 8% week ago and 7% year ago

Winter Wheat:  Planting is 5% complete vs. zero a week ago and 1% year ago.  

Spring Wheat:  Harvest is 82% complete vs. week ago at 69%, and year ago at 66%

ANNOUNCEMENTS

Indonesia, the world's largest palm oil producer, plans to revise its palm oil export levy rules to allow higher collection when prices increase, as reported by a senior cabinet member to Reuters, as part of moves to underpin an ambitious biodiesel program.  

Ukraine's Agritel forecast its corn production at 33.5 mmt, down 6.5% from year ago.  

DELIVERIES

beans:  15

soyoil:  453

meal:   39

corn:   207

wheat: 7

CALLS

Calls are as follows:

beans:  3-5 higher

meal:  2.20-2.50 higher

soyoil:  20-25 lower

corn:  1/2 to 1 lower

wheat:  steady

u

A steady crude oil market which traded to a low of $36.16/barrel, and higher US dollar at 93.66.  The stock market is up 203 pts after trading lower led by tech stocks. over the last few days.  

TECH TALK

  • The November bean rally does not appear to be over, as small setbacks continue to hold, placing a new high this AM at $9.78.  This opens the door for a further climb to test $9.80/$9.85.  The market is extremely overbought at 80%, which signals trouble ahead if prices move sharply higher.  The bean ADX climbs to 35, meaning pullbacks should be purchased.  
  • Meal prices climb towards recent highs from $318.20-$318.30.  Since bean prices closed at the strongest of extremes, look for Dec meal to quickly challenge its recent highs.  Target highs now move back to $320.00.  
  • December soyoil is lower this AM, but the 3280c-33c level could be a base of support for another run at recent highs of 3404c.  Could be long against 33c for a day trade, though meal looks to gain on soyoil today.  
  • December corn prices once again sit just under the 200-day moving average of $3.61 1/2.  However, a new support is now building reinforcing support from $3.57-$3.59, and that looks to ultimately push the market back over $3.61 1/2.  Would look for a pullback to own in this market, as the target high from $3.69-$3.72 could be met.  
  • December wheat briefly takes out key support at $5.42 but appears ready to follow the other markets higher.   Could be short if the market drops under $5.40, but until then would stay neutral to long. 

DECEMBER SOYOIL

The major trend is higher with the ADX sitting at a very strong 44, (anything over 25 is a strong trend).  Therefore, pullbacks are still going to see buying interest.  The market has not yet been able to place a new high over 3404c, but is taking a time-out congesting in a triangle pattern from 3180c-34c.  Though prices are now turning sideways, the chart is still fairly constructive, and looks to exit this triangle to the upside, continuing the recent upward trend.  There is not yet a good reversal signal, which is suggesting that the up-move is over.  If prices move into the apex of the triangle, it could indicate fair value and a more sideways price movement.  Overall trading range stands at 3250c-34c, but could be higher.  

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