GOOD MORNING,

The commitment-of-trader's report will be out tonight.  Will it show that the managed money funds flipped from a long to a short position in corn?  If so, the position is probably not a large one, but it does represent a willingness on the part of the funds to be net short Ag commodities across the board.  If funds do wind up short corn, it will be the first time they have been short since last May.  

The Pro Farmer crop tour begins next week, but there could have been a foreshadowing of things to come today.  After the close, a "digital" yield tour sponsored by DTN and Progressive Farmer found yields in Illinois, Indiana and Ohio that were much below the August WASDE numbers (12-15 percent).  If funds just got short corn, it would not take much to set the stage for a bear trap; just a turn of weather to warm and dry plus bullish findings and the worm could turn.  

In the meantime, consumers got some important coverage on at lower levels of trade with the hard break in grains and beans/meal.  Soyoil prices remain firm with NOPA oil stocks tight and the indication there has been a good rate of consumption.  

WEATHER

There is just enough rain to keep the corn and bean bears happy, along with extended NOAA 30/90 day maps that look non-threatening as well.  The 6/10 plus 8/14-day maps are warm and wet along with cooler than normal September temperatures, which may show that the next issue for crops is not moisture, but a cold snap that brings an early frost.  Weather short-term is bearish, and current rains will help the crops in the areas that receive them.

BUSINESS

Egypt's GASC purchased 175,000 mt of Russian wheat and 120,000 mt of Ukrainian wheat.  Korean buyers were looking at US corn with the hard break this week, but still are likely to purchase out of South America.  

ANNOUNCEMENTS

China's Ag Ministry reported that the Chinese hog herd shrank 32 percent in July from year ago, which was worse than June where it shrank by 26 percent.  

Trump said Thursday that the US and Chinese negotiators were holding "productive" talks and expected them to meet in September despite US tariffs on over $125 bln worth of Chinese imports taking effect Sep 1.

CALLS

Calls this morning are higher across the board on a weekend short-covering bounce:

beans:  3-5 higher

meal:  1.20-1.50 higher

soyoil:  10-14 higher

corn:     2 1/2-3 higher

wheat:  1 1/2-2 higher

OUTSIDE MARKETS

Outside markets feature firmer crude oil, trading up to $55.67/barrel, and a firmer US dollar trading up to 98.30.  Gold prices are lower down $8.00 to $1511.40/oz, while the Dow rallies 230 pts on comments from Trump which indicate that talks there could be a September meeting despite all the negative rhetoric.  

TECH TALK

On this Friday we find that the theme of trade is consolidation as we retrace some of this week's break.  

Corn prices hit a new low yesterday at $3.69 with a good close, but technically the chart has not put in a bottom.  Trendline support is under the Dec corn market at $3.65/$3.67 on another break if we cannot get back over $3.75.  Lower support at $3.67 in Dec corn also fulfills a projected target low.  

December wheat has trendline support once again at $4.70 as we appear ready to form a $4.70-$4.85 trading range.  November beans attempt to stabilize posting double lows at $8.70.  ON another challenge trendline channel support is close by at $8.68/$8.70, and think it probably holds for further $8.75/$9.00 definition trade.  

December meal turns lower from recovery trade but has trendline support at $295.00 on a break of size.  Given that we begin the day close to the lows, we could challenge $296.00 again, but think we remain in a $295.00-$300.00 trading range.  

Dec soyoil futures once again sit over the 200-day moving average of 2945c, making it an extremely important level that must hold in order to rally back to 3025c trading range highs.  The chart will look toppy on any trade now back under 2945c, and if long would book a profit should we violate this level. 

DECEMBER CORN

The structure at the top of the chart was about 53c in scope to the topside of $4.20 (4.73 ctr high), with $4.20 having been defined as a key pivotal support low in a previous bullish scenario.   We have now traveled nearly 53c down from $4.20 (would be $3.67) which sometimes fulfills projections once a different pattern emerges.  Therefore, while the overall low has yet to be defined, it looks like we are coming close to what may be temporary support just off pattern projections.  

Because we are not so far away from our low of $3.69, we could walk back and eventually test it to make sure it can hold.  If short, would probably elect to take something off at this point, and the rest in case we fill the overhead gap at $3.88/$3.92 with a settlement back over.  Look to probably be in the early process of forming a trading range from $3.67-$3.87.  

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