GOOD MORNING,

Bull market price action continues as funds purchase the market based on technical strength.  Most of the markets except for soyoil continue to post new or ctr highs.  Beans continue to trend higher with rumors and confirmation of further Chinese business.  Tuesday Chinese demand revolved around Jan and Feb shipments.  US markets continue to follow higher Chinese Dalian Exchange prices for corn, and rising Black Sea premiums for wheat.  Bean and corn basis levels remain firm.  

The US farmer is somewhat engaged but upper targets are still pending.  Brazilian farmers are good sellers due to the weaker Brazilian Real, with forward sales now estimated at 55%, which is much higher than in previous years, according to AgriCensus.   Hedge pressure from Argentina is non-existent as they hold beans due to currency and export tax issues.  The Argentine port strike continues with port workers said to be far apart from reaching a deal with port companies.  The union is asking for wage increases based on inflation projections, but company officials say they do not agree with those inflation projections and would wait to see final figures released at the end of the year. 

WEATHER

--Cold and wet weather persists in the US, with snow in the upper portions of the country.  Periods of rainfall will create harvest delays in the Midwest.  Periods of showers in the Delta create harvest delays as well.  

--Argentina and center-south in Brazil are expected to get better rains over the next 7-10 days.  Brazil picks up better rains which favors planting and germination.  Recent showers in Argentina help with depleted soil moistures, but more showers are needed.  Widespread rainfall is expected this week. 

ANNOUNCEMENTS

Brazil's CONAB said they would not expect large imports of soy in the short term after the gov. removed the import duty late last week, nor do they see changes in corn imports through Jan 2021.

New crop bean planting in Brazil's second largest state of Parana is 32% as of Oct 19, vs. 16% week ago, according to Deral.  The faster pace is due to rains in recent days.  

Brazil's ANEC forecasts Oct. 2020 bean exports at 2.32 mmt, down 20,000 mt from prev. week, and corn exports at 5.5 mmt, up 300,000 mt vs. the previous. week.

Cordonnier forecasts Brazil and Argentina bean production estimates unchanged with a neutral bias, forecasting bean production at 132 mmt and corn at 110 mmt.  He forecasts Argentina's bean production at  52 mmt and corn at 50 mmt.

Pork supplies during the upcoming Lunar New Year holiday in China will be 30% higher than yr ago, after significant efforts were made to rebuild the herd after ASF.

CALLS

Calls are as follows:

beans:  8-10 higher

meal:  5.00-6.00 higher

soyoil;  10-15 higher

corn:  3 higher

wheat:  1 1/2-2 higher

OUTSIDE MARKETS

Slightly weaker for crude which trades to $40.85/barrel, with the US dollar falling to new lows at 92.68.  The weaker US dollar continues to underpin exports.  Stocks are down 25 pts.  

TECH TALK

• December corn prices hit a new high today after walking back price action towards the $4.00 level, which held this week to become a market bottom.   As the charts place new highs, the $4.20/$4.23 target becomes more likely.   Look for breaks back towards $4.05 to now be a place of good support.  Corn remains a well bid market, refusing to break below $4.02/$4.03 leading to today's highs.  
• December wheat charts also work higher, with KC leaving a small gap to the upside.  Chicago wheat establishes a new low from $6.15/$6.20 with new highs in place, and a target now at $6.50.  Would look for a break to $6.16/$6.25 as a buying opportunity in a market yet to top out.  
• January beans move upward after establishing $10.50 as new and somewhat higher support on a pullback.  Look for prices to challenge recent highs, and targets are now from $10.75/$10.90, or $11.00.  
• December meal prices are choppy, but also hit new trading range highs this morning after breaking back to $360.00 yesterday.  The low today at $372.00 was a recent high, and now becomes key support in a market that has yet to achieve its top.  There is no reversal signal here, so one could continue to own pullbacks for higher trade.  
• December soyoil is sideways in a 32c-3450c trading range.  Prices established double lows at 3150c several weeks ago, and now 3228c this week.  Would note that the high this morning close to 34c is up against minor trendline resistance, and prices could continue to congest from 33c-34c.  However, would prefer to own breaks in this market, as any rally over 34c would trigger buy-stops and another 50 pt. rally. 

DECEMBER CORN

Major support has now been established at $3.88/$3.93, with higher prices likely as the chart advances.  The ADX trend has now strengthened to 48, which means even shallow pullbacks will find support as more buyers hop on board.  Look for the likelihood that this chart visits eventual previous tops from $4.20/$4.23 given chart strength.  The market continues to move in the uptrend channel established, and channel support is once again located at $4.02.  The market would therefore have to break the channel to begin to turn lower.  Conditions are overbought as the relative strength index climbs to 73%, which calls for corrective price action at some point.  Typically, overbought extremes can get as high as 82/85%, which eventually finds a correction and house cleaning activity.

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