GOOD MORNING,
Prices are mostly firmer with wheat leading the way in terms of market strength, which has allowed corn to trade higher. Report day is on Friday at 11:00 central time. It is an important one, although the October report eventually has the near final word on yields and production as we head through harvest. Bull traders are looking for a bullish report to begin a new leg higher, while a bearish report will create a much- needed house-cleaning scenario. However, all good bull markets have hard breaks, and this bean market is more than due as overbought readings head into overdrive.
Brazil begins its planting season, with CONAB forecasting record crops with total corn production for 19/20 at 102.5 mmt, and beans at 124.8 mmt. The bean exports for 19/20 are forecast at 82.0 mmt, with 19/20 corn exports at 34.5 mmt.
WEATHER
The 6/10 day outlook is mostly dry with isolated showers in the south Wed - Friday. Temperatures will be near to below normal for the week, trending near to above normal into Friday. Mostly favorable conditions for beans in the Midwest with moderate rainfall in the region for much of the week. There are some sub-freezing temperatures possible across far northern Minn. and the Dakotas through Thursday or Friday morning.
ANNOUNCEMENTS
Brazil's gov. is planning to extend a tariff-free ethanol import program for 3 months. Brazil allowed a non-tariff quota for imports of 750 mln liter/year of ethanol to expire at the end of August, resulting in US producer's having to pay a 20% tariff.
Argentina's bean harvest for 20/21 is forecast at 50 mmt, as reported by the Rosario grains exchange. Corn is forecast for 20/21 at 48 mmt.
Dry weather in Ukraine has delayed the sowing of winter grains for 2021. Russia is dry, but sowing there remains ahead of last year's pace.
Brazil's ANEC forecast Sep. bean exports at 4.3 mmt, vs. 4.2 mmt week ago. Corn exports were forecast at 5.7 mmt vs. 4.8 mmt week ago.
DELIVERIES
beans: 1
meal: 30
soyoil: 1
corn: 2
CALLS
Calls are as follows:
beans: steady/firm
meal: .20-.30 higher
soyoil: 3-5 higher
corn: 1 1/2-2 higher
wheat: 5 1/2-6 1/2 higher
OUTSIDE MARKETS
Weaker with crude oil trading down to $37.30/barrel with US equities mixed. The Dow is off 82 pts. US dollar trades down to 93.01.
TECH TALK
- December corn chart builds on grains with an uptrend line intact showing fortified support at $3.58. Prices are against minor trendline resistance at $3.63, and trade over will result in more buying and a test of $3.65. Target high remains $3.70 for Dec corn on a trade over $3.65, and the chart is constructive suggesting the next leg is upward.
- Dec. wheat falls to test the 200-day moving average of $5.42, which held successfully for a market bounce. Look for $5.55/$5.60 to offer up significant resistance in a sideways trading range from $5.40-$5.68.
- November beans begin to consolidate as charts are overbought and in need of congestion trade. However, the uptrend is strong and would continue to own good breaks. The market nearly matched a previous high set back on Jan 2 at $9.82 ¾, which sets up a natural point for a back and fill trade.
- December meal prices come close to a target high of $320.00. Would continue to own good pullbacks, as $313.00 has now become a very good level of key support.
- December soyoil prices congest from 33c-34c, setting double lows this AM at 3305c. Could now own this market against 33c for a probable trip back towards recent highs, and 3280c-33c has become very good support.
NOVEMBER BEANS
Bull market scenario with all the hallmarks in place, namely rising open interest, higher volumes, and new highs. Channels of support mark the trading range, beginning with the lowest end of key support at $9.50, but secondary good support on a hard break at $9.60. All in all, the market has moved in 50c chunks from $8.50-$9.00, and then from $9.00- $9.50. Adding another 50c targets $10.00, and that could be where prices are headed if history is going to repeat itself, which is what charting is all about in any case. Would look for the RSI issue at 81%, (extremely overbought) to be resolved as the market needs a healthy dose of price consolidation. However, the major trend is higher with an ADX reading of 36, so major pullbacks are buying opportunities, and the market would have to close under $9.50 to negate that. So far, there have been many bull trading signals set off, but no good reversal ones in sight for the moment.
TAGS – Feed Grains, Soy & Oilseeds, Wheat, North America
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