GOOD MORNING,
Prices are mixed this morning, though all are sitting close to trading range lows except soyoil. The uncertainties of upcoming trade talks between China and the U.S. plus large crops continue to weigh on beans. Officials in the Trump administration are reportedly recommending the delisting of Chinese companies by 2022 if the companies' audit documents cannot be accessed by US audit watchdog groups. Export bean sales continue to support beans, which try to break but continue to find support at trading range lows. A weaker Brazilian Real continues to result in more production and larger acreage expansion for the 20/21 bean growing season, which is set to begin in Sep. Soyoil prices are lower on profit-taking in palm oil and weaker crude. Meal prices are steady but also sit just above ctr lows.
Wheat prices have a seasonal sell signal, and this market is set for its largest weekly loss in one year. Corn is steady and congested but the technical chart is not offering up a good reversal signal. Funds are probably net short 10K wheat and 175K corn.
WEATHER
Weather in the Midwest will turn warmer and drier next week, but subsoil moistures are good for now. The 6/10-day outlook features scattered periods of rainfall next Tues. - Sat. Temperatures are above normal Sunday-Monday. Dry spots in western Iowa are causing stress, with some dry spots in the Delta.
ANNOUNCEMENTS
China's bean imports rose 18% through July vs. year ago as large volumes of beans purchased cheaply from Brazil have arrived in the country. China imported 10.1 mmt of beans last month, up from 8.6 mmt in July 2019, but the below June's record 11.2 mmt.
French farmers are nearly done with wheat harvest, with dry and hot conditions producing a small crop. Corn conditions slipped to 74% good/excellent, down 3 % this week. Hot and dry weather is now impacting the corn crop.
Argentina's BA Exchange stated that drought is impacting their newly planted wheat crops, with planted areas expected at 6.5 mln hectares vs. 6.8 mln at the start of the season.
DELIVERIES
meal: 286
CALLS
Calls are as follows:
beans: mixed/lower
meal: steady/firm
soyoil: 20-25 lower
corn: steady
wheat: 1 1/2-2 lower
OUTSIDE MARKETS
A firmer US dollar at 93.22 vs. other currencies on Thursday, following the release of jobless data for the US showing fewer Americans were on employment benefits than expected. Crude oil is weaker trading to $41.35/barrel. Gold prices are lower, down to $2040.10/oz. Dow is down 103 pts.
TECH TALK
- September wheat finally tests $5.00, which has held as major support on breaks when prices preceding have been higher. Look for $4.95-$5.00 to continue to offer support, but the new lows and cycle down trade suggests that rallies will now be sold.
- Dec corn prices continue to congest above recent contract lows, and the more price action can stay above those lows the greater the chance for a bounce towards $3.25/$3.27 1/2. Would still be on the look-out for new contract lows, as Dec corn must trade back over $3.30 to even suggest that prices have stabilized.
- November beans cycle lower, and the chart is now beginning to form a down-trend channel. Channel support still is close to $8.74, and $8.83/$8.84 offers resistance.
- Dec soyoil begins to build in resistance from 3150c-3170c, with a pullback to the 31c level. Best support if the market were to break 3080c is 3050c, and if short would cover futures should we go there. Would also try the long side of the market, as it is the 200-day moving average.
- Dec. meal prices remain weak, trading back to previous contract lows at $287.50. However, with the trend so with an ADX of only 16, follow-through to the downside of ctr large appears tough to come by. Trendline support remains at $287.50, and a break of this level would find the market on a path towards $285.00 /$286.00.
DECEMBER MEAL
Overall trading range is from $287.50 - $303.00/$310.00. The major direction remains higher, but rallies of size continue to fail. Trading near contract lows usually implies that eventually prices will move through them for lower trade. If prices can retain $287.50 with a close back over $289.00 would look for higher trade back into the middle of the recent range. Lack of trend implies that we probably do that scenario for a trade back towards $300.00.
TAGS – Feed Grains, Soy & Oilseeds, Wheat, North America
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