GOOD MORNING,
Seasonal lows are sometimes set after the September or October reports, and it's always about fund flows and market reaction to the data. The Sep report was neutral to bearish for corn, but funds decided it was time to cover part of their short position when prices returned to contract lows setting the stage for an outside day of trade closing higher. However, the up-move started with beans yesterday as rumors floated on the trading floor that China had purchased beans off the PNW. Reuters later confirmed 600 tmt of beans were transacted for Oct/Nov delivery, with basis strengthening from +17 Nov to +33 Nov.
This morning, China's state media, citing unidentified sources, said the gov. will reportedly exempt some agricultural products (beans and pork) from additional tariffs. It is unknown when buying will resume, as China is on holiday today.
WEATHER
US weather is favorable for crops with no sign of an early frost for the next few weeks, with warmth and chances for rainfall. Brazil conditions remain dry for the next few weeks, and have to keep an eye on their weather as planting is due to pick up at this point in the year.
STORIES
Trump met with senators from key Ag states yesterday stating that there has been recent progress on the biofuel deal.
ANNOUNCEMENTS
USDA reported as of Sep 4 US corn prevent plant acres at 11.414 (prev. 11.211), bean prevent plant acres at 4.460 (prev. 4.351), and US wheat at 2.215 (prev. 2.209)
USDA reported 2019 failed wheat acres as of Sep. 4 at 374,845 acres (prev. at 366,391), failed bean acres at 64,261 (prev. at 62,391), and failed corn acres at 450,363 (prev. 431,238).
Argentina's BA Exchange reported wheat heading progress at 7.4 percent vs. 4.0 percent week ago.
EIA reported June 2019 US biodiesel output at 142 mln glns, down from 155 mln glns. During June 2019, 594 mln lbs of soyoil was used as feedstocks, that represented about 54 percent of the total.
DELIVERIES
cbot wheat: 55
KC wheat: 5
beans: 177
soyoil: 38
meal: 48
corn: 123
CALLS
Calls today are higher across the board:
beans: 1 1/2-2 higher
meal: 1.20-1.40 higher
soyoil: 5-10 higher
corn: 4-4 1/2 higher
wheat: 5-7 higher
OUTSIDE MARKETS
Outside markets feature a weaker US dollar, trading down to 97.99, and weaker crude at $54.44/barrel. The Dow is up 103 pts.
TECH TALK
There were many positive technical signals that suggest that either lows have been set, or that we have bumped up trading ranges. Those signals include outside days closing higher, and reversal patterns to the upside of major downtrend formation. Funds may choose to slowly move out of short positions.
- Dec corn and wheat posted outside days of trade closing higher, which always has follow-through and today was no exception.
- The charts have changed their look with corn prices now sideways from lower as it moves into trading range territory. For the day, trendline resistance for Dec corn crosses at $3.75, and a break-out that would trigger more fund buying would come from a move over this level. Look to probably test $3.74 ½/$3.75.
- Dec wheat charts follow-through to the upside with higher trade and could target the 100-day moving average at $4.98, with what appears to be a chart bottom as well. Typically, wheat does find a bottom this time of the year. First resistance for Dec wheat crosses today at $4.92/$4.93.
- Nov beans are starting to turn major direction higher from lower, with key resistance at $9.00. Any move over $9.00 targets $9.15, which has very strong resistance as it peaks higher from last July and coincides with the 200-day moving average. The only question is can we go there? The trend is weak still with an ADX reading at 15, but if short, this is your risk, and think at some point in time we test it.
- Dec meal turns higher to the upside of its long-standing downtrend channel, and the high side target is now from $308.00 to $311.00. Turning to the upside of a long-term pattern is net positive and any pullback to the top of the channel will be a buying opportunity.
- Dec soyoil charts look price congestive, with the 200-day moving average at 2945c. Would look to possibly go there, but price action may stall once we hit it.
Today's target highs that will find initial resistance:
Nov beans: $8.98-$9.02
Dec meal: $303.50/$304.00
Dec soyoil: 2945c
Dec corn: $3.75
Dec wheat: $4.92/$4.93
DECEMBER MEAL
Major trend was lower and we hit a low of $292.00, close to $291.60 contract low before closing back over $300.00. The downtrend channel has been in place from August highs of $306.30 to Sep lows. Turning to the upside of major downtrend channels suggests that pullbacks will be purchased, and would look for the possibility that a further rally could target $306.00 again. As opposed to a sideways/lower trade, the chart has now turned sideways and lower support points therefore become more buy-able. A setback to top of channel today would be at $300.00, and if we go there, it should hold for an eventual $292.00-$311.00 trading with a mid-point stop at $306.00.
TAGS – Feed Grains, Soy & Oilseeds, Wheat, North America
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