GOOD MORNING,
Prices are higher on the early night session as charts build on gains and on chatter that China has been actively purchasing US beans. The reversal trade on Friday for corn and beans showed promise, but would still call the bean rally a "relief" rally from the lows, while corn had to see a better volume, high settlement trade to generate excitement. Think that we are now in for congestive trade off our lows. It may not take much to send us back towards them, with beans showing more gusto on the climb higher.
August NOPA crush will be released at 11:00 central time, and advertised expectations are for an estimated 154.183 mln bu, vs. 155.105 mln bu in July. Soyoil ending stocks are advertised at 1.555 bln lbs. Slower crush was attributed to plant idle times for maintenance and tight bean supply. Beans are finding some modest strength from charts forming more support from $12.60-$12.70. China's purchases, while steady, continue to be modest in scope. Progress at the Gulf continues, with firming bids in the CIF market. Hopefully, exports will be able to resume soon.
A small downtick in corn ratings helped to stabilize prices, though overall demand is low. US corn prices are the cheapest globally, with Gulf disruptions continuing to be negative. The export inspections came in light as expected given the current situation in the Gulf, where it is reported that there are around 50 vessels waiting to be loaded. As of Sep. 9, US exporters shipped only 138,189 mt of corn vs. 278,294 wk ago.
Monday's export inspections came in at 548 kmt vs. week ago at 413 kmt. Marketing year-to-date shipments now stand at 7.066 kmt vs. 8.161 kmt year ago.
WEATHER
--Midwest remains warm and dry with scattered showers which will allow for harvest and maturation of crops. Tropical storm Nicholas is threatening to turn into a hurricane off the coast of Texas.
--Conditions in SA remain mostly OK for bean planting.
REPORTS
Crop Progress:
Corn: 58% good/excellent down 1% from week ago. Conditions mostly deteriorated in the ECB. Dented: 87%. Mature: 37%, both ahead slightly behind year ago.
Soybeans: 57% good/excellent, unchanged from week ago
Winter Wheat: 12% planted vs. 9% year ago.
ANNOUNCEMENTS
Russia's IKAR stated that early Oct wheat prices were marginally higher than week ago, making it the ninth consecutive week prices have risen.
Russia's Ag Ministry stated that wheat exports are at 6.7 mmt, down 21.6% from year ago. However, Russia did export 5.8 mmt of total grain for the month of August, which is a record for that month.
The sale of the Brazil Safrinha corn crop reached 70% of production, up from 63% year ago, according to an estimate from Safras and Mercado released Monday.
DELIVERIES
wheat: 6
CALLS
Calls are as follows:
beans: 4-6 higher
meal: 1.20-1.50 higher
soyoil: 45-50 pts higher
corn: 2 1/2-3 1/2 higher
wheat: 6-9 higher
OUTSIDE MARKETS
Higher energy prices which now climb to $71.14/barrel. THe US dollar falls to 92.48, as the buy energy/sell currency trade is on again. Stocks are down 40 pts.
TECH TALK
- November bean prices continue to rally from $12.70. Look for prices to likely take a stab at climbing back to $13.05, but has to settle over to extend its range higher, back towards $13.35. Given its harvest rallies towards $13.00 are likely to be met with selling activity.
- December meal also has a turn from the lows with a chart rounding bottom which tends to hold. Look for a rally towards $355.00, but have to settle over that to leg towards $375.00.
- December soyoil futures confirm a bottom at 55c and would look for pullbacks towards 56c to be a buying opportunity for a further move up towards 60c to 61c again.
- December corn futures now move over $5.15 which is confirming that $5.00 is an interim low for now. Any rally towards $5.25 /$5.28 is likely to present stiff resistance but think we can go there to try to broaden this range.
- December wheat prices also appear to have hit a cycle low at $6.77, and so far confirms a $6.75 - $7.20 trading range. A close over $7.00 probably takes the market back towards the neckline of the head and shoulders at $7.22. At the very least we are now approaching $7.00 in confirmation of a trading range off the lows.
DECEMBER MEAL
The meal chart is sporting a rounding bottom which is a type of reversal trade. It is not the strongest reversal trade, (as opposed to a solid key reversal), but the advance does have legs. Ironically, the market has shorts in it, as prices trend slightly firmer off the lows. Trading range is from $355.00 to $365.00, with an interim resistance level of $355.00. A close over $355.00 would be needed to generate a true buy signal. Look for more sideways trade, but rallies here have tended to also fail.
TAGS – Feed Grains, North America
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