World Perspectives
feed-grains

AM Outlook - Still Awaiting Upside Reversal

GOOD MORNING,

Prices overnight continue to trend lower for grains, while attempting to put in some stabilization trade for soyoil and beans.   Outside markets are showing a recovery from yesterday's nose-dive, with crude up which is supporting soyoil futures.  Beans are also seeing some stabilization as traders return to buy beans/sell corn trade.  

Activity in the Gulf continues to get on track.  Yesterday's corn inspections at 403,104 mt was decent but behind the 768,000 a year ago, with China in for 140,245 mt.  Bean loadings improved from 193 mt week ago, but vs. 1.391 mmt year ago.  Wheat inspections were 563 mt vs. 567 mt week ago.

Harvest continues with some chatter about disappointing yields in western Illinois. Other areas will be too wet this week to continue, but the next few weeks appear drier.  

WEATHER 

--Short term weather is wet, while 6-10 and 8-14 day turn drier which will speed harvest.  

--Weather in Brazil features a normal pattern which is conducive to planting beans.  

REPORTS

Crop Progress:

Corn:  10% harvested, in line with trade expectations.  Dented:  93%.  Mature:  57%.   Conditions rose 1% to 59% good/excellent. 

Beans:  6% harvested vs. expectations at 5%.  Dropping leave:  58% vs. 38% week ago.  Good /excellent up 1% to 58%.    Illinois showed the largest improvement which accounted most for the better rating.

Winter Wheat:  21% planted vs. 19% year ago and 12% week ago.  

Spring Wheat:  3% emerged.

ANNOUNCEMENTS

Chinese customs announced that August bean imports were 9.49 mmt, which is 1% lower than year ago.  Brazil bean imports increased to 9.04 mmt vs. 8.5 mmt year ago.  US bean imports fell to 18 mmt vs. 166 mmt year ago.

Brazil's AgRural stated that farmers have planted 0.1% of their beans through week ago, with most of it occurring in the major producing states of Mato Grosso and Parana.  

Ukraine's winter grain sowing was 17% complete as reported by the Ag ministry, sowing 1.32 mln hectares of winter grains for 2022 as of Sep. 17.

China's monthly corn imports for August jumped by 221.2% vs. year ago as demand from the feed sector supported large purchases.  China purchased 3.23 mmt of corn in August, the second highest level on record, according to the CGAC.  

CALLS

Calls are as follows:

beans:  1-2 higher

meal:  .20-.50 higher

soyoil:  10-15 higher

corn: 2 1/2-3 1/2 lower

wheat:  3 1/2-4 lower

OUTSIDE MARKETS 

Mostly stable as crude rises to $71.63/barrel and the US dollar falls to 93.06.  Stocks are 250 pts higher. 

TECH TALK

  • November bean prices remain stuck at the bottom of a trading range with a current low of $12.60, which is under the 200-day moving average of $12.66. That opens the door to further potential weakness, although would note that trendline support is located at $12.52 should we go there.  Target low moves down to $12.40 with the ability to place a new low, and the best sign of stabilization would be for a close back over the 200-day MA at $12.66.  
  • The December meal is in a congestion phase but just about ready to move down towards recent lows at $335.00.  Chart is open for another test of the lows, moving down and away from crossing moving averages.  Strong support remains at $335.00, but on technical weakness it could be tested.  
  • Dec. soyoil is posting a double low at 5479c, which has been the pattern to hold for a regroup trade to the upside.  The market is neither overbought nor oversold, but 55c may be value.  Trading range has been 55c-60c, so if needing to price is not a bad place to do so.  Additionally, like the bean chart, trendline is close by at 5450c should we go there.  
  • December corn "feels" heavy, now trading down and away from a minor formation of new chart resistance from $5.20-$5.25.  Failure to move about this level is creating a trade down towards the 200-day moving average at $5.09.  Chart is returning to yesterday's support level at $5.15 to see if it can hold.  However, returning to previous lows is never a sign of technical strength.  
  • December wheat prices will open into key support from $6.95-$7.00.  This level is a pivot area in a broader range, so pushing through $6.95 this AM likely triggers more selling and a trade towards $6.75/$6.80.   

Sum and substance is that all markets have to prove that current lows can stand, and none have triggered an upside reversal which would stabilize trade.

DECEMBER WHEAT

Prices tested $6.95 - $7.00, and so far appear ready to maintain a market range from $6.95-$7.20.  Prices under $6.95, however, suggests another sell-off towards the lower end of prices at $6.75.  With an ADX at 13, meaning there is virtually no trend, would expect a sideways range from $6.80-$7.20 to continue, which one can straddle or strangle.  

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