GOOD MORNING,
Funds were sellers yesterday, figuring the market has met some key upside objectives, but the markets are not giving back much this morning. All have traded both sides of unchanged. Export sales and ethanol still remain negative for corn, but the tighter stocks number Monday negated some of that bearishness. Still, funds probably hold an estimated 100K short in corn. Beans are mixed but meetings between China/US are to take place this month on the 10th, same day as the USDA October report, creating more unknowns for a bean bear. Beans stocks are ample, but the trend has seen tightening. Wheat prices move around following the path of Minneapolis, which fell to new lows yesterday with a long drop of 30c off its highs. As to Chicago, the next USDA report may raise global stocks again, and in its tender, Egypt purchased one French wheat cargo with Russia and US out of the running.
WEATHER
Rain is expected to slow harvest across the central Midwest, which could further delay harvest. There is still no sign of a frost, with the coldest temperatures tomorrow, but west of the major soy/corn producing areas. Brazil continues to receive beneficial rainfall. Gist of weather is mostly bearish. Brazil sees enough rain over the next two weeks to get on with planting. Argentina remains drier than normal.
ANNOUNCEMENTS
Following a WTO ruling in favor of the US, it announced that a 10% tariff would be placed on EU aircraft and 25% on certain ag and industrial goods beginning Oct. 18.
Brazilian corn farmers have priced about 25% of their Safrinha corn crop due to the weaker Brazilian currency which gives them a better exchange rage. Exports are expected to be a record 35 mmt.
Rabobank estimates that China's hog herd may drop by as much as 55% by the end of 2019.
South Korea reports two more cases of ASF, bringing the total to 13 since Sep 17.
Ukraine's deputy minister said the government will sign a memorandum of understanding with traders setting terms for grain exports for the July 2019 to June 2020 period.
Newswires reported that the biofuel deal brokered by the Trump administration will continue to grant small refiners partial waivers.
DELIVERIES
In reports, export sales were released this morning and were good for beans, low end products and grains. Prices sold off after the release of the numbers.
Calls today are as follows:
- beans: 3-5 lower
- meal: 1.40-1.80 lower
- soyoil: 3-4 lower
- corn: 1 1/2-2 lower
- wheat: 2 1/2-3 lower
Outside markets feature a slightly firmer Dow which has traded both sides, and a crude oil market that trades to $52.25/barrel. The US dollar remains strong but is off the highs of 99.19.
TECH TALK
Nov beans met the strong objective of $9.20 after exiting a bull flag formation for higher trade. The 200-day moving average and trendline support cross from $9.09 -$9.11, and the market is backing up to test these lows. If wanting to be short, Nov beans have to break $9.09 which could become a swing point in a $9.00-$9.20 trading range.
Dec soyoil congests from 29c-2940c, and builds on support from 2880c-29c. Would prefer to be a buyer of Dec soyoil though it is testing key resistance today from 2935c to 2941c. Trade over the 200 day moving average of 2941c sets the stage for a rally back towards 2965c.
Dec meal prices are sideways but well back below double highs at $309.00, which pulled the trading range higher from lower. Bottom of range moves up to $300.00, and a break below $305.00 will get us there.
Dec corn may not be finished with its rally and is right now testing the $3.85 level of support. The gap left open from last August is closed, but a stronger performance would have come from a settlement over the gap. However, would term this activity in corn now as congestive with good support at $3.80/$3.82 and resistance now at $3.91.
Dec wheat prices show the most potential for lower trade with a build of better resistance with three tops at $4.99, and a break of $4.83 (double lows) taking the market back down to $4.75. Current Dec wheat trading range is from $4.70-$5.00.
DECEMBER MEAL
Trading ranges prior to the Monday Stocks report was from $294.00-$304.00. Major direction post USDA report is higher from lower, with the market meeting very strong objectives at $309.00, where multiple points of resistance sit (lows from end of July), as well as the 200-day moving average crossed. If short and the market trades back over $310.00, would look for a challenge of the 200-day moving average at $314.00. If wanting to straddle/strangle the market, seems now that $295.00-$310.00 is a good value level to do so, as outlined in the chart in red.
TAGS – Feed Grains, Soy & Oilseeds, Wheat, North America
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