GOOD MORNING,

Prices are mixed with wheat and soyoil leading the way in strength.  The PM session featured more congestion trade as harvest rolls on and funds continue the process of positioning in front of the September 30 Quarterly Stocks report.  Helping to steady the markets were stable outsides including Chinese equities.  The drama with China's company Evergrande continues to play out, as they said they would make one bond payment, but concerns linger.  

The EPA headlines yesterday which was released at mid-session broke corn and soyoil futures, as the story read that the Biden administration is still considering big cuts to the nation's biofuel blending requirements, according to a document seen by Reuters.  After the story broke, credits used to prove compliance with the requirements, called RINS, fell to 92c each from $1.07 in the prev. session.  In a clarification, the administration announced it would reduce blending mandates for 20 and 21 to about 17.1 bln gallons and 18.6 gallons, respectively.  They would then set the level for 2022 at around 20.8 bln gallons.  EPA cautioned that the numbers are not final, and after the release the RFA called the story a fabrication.   

This story has been floated in the market numerous times, with it each time having a negative result on the soyoil and corn market.  Perhaps the most intriguing item for the day was the ability of soyoil futures to bounce back after the release, which is friendly market behavior.   This AM, soyoil futures are bouncing back taking beans along for the ride.  Traders are back to buying soyoil/selling meal.

Chatter continues that the Gulf export elevators are coming back online sooner than expected.  Traders continue to look for Chinese bean announcements.

The oat market was at new record highs as supplies in Canada became tighter.  There are now rumors of possible oat imports.   Canada is the largest producer of oats and exporter in the world.  Wheat is higher following a rally in the Matif contract.  Black Sea wheat futures are higher with contracts over $300/mt FOB.  The Sep 30 Quarterly Stocks report will focus on final spring wheat production including abandonment acres, as well as Q1 feeding.  

WEATHER

--US weather remains dry in the west but rains in the eastern half reaching from the Great Lakes down to the Gulf slows fieldwork efforts.  Forecasts keep rains in the nearby but turning below normal coverage for almost all the US in the 6/10-day period.  Rains are called to hit the Texas and Southern Plains, which is badly needed for winter wheat.  

--South America has been on a drying trend, with Argentina having adequate moisture for now.  More will be needed in the near term.  

REPORTS

Export Sales:

beans:  21/22 net 902,900 mt and 22/23 net 10,000 mt (vs. an expected 500-1.1 mmt)

meal: 20/21 net 45,000 mt and 21/22 net 216,000 mt  (vs. an expected 40-100 kmt and 25-175 kmt)

soyoil:  20/21 net 4,300 mt (vs an expected minus 10 to plus 10 kmt)

corn:  21/22 net 373,000 mt  (vs. an expected 300-800 kmt)

wheat: 21/22 net 355,900 mt  (vs. an expected 300-500 kmt)

Wheat:  moderate sale, with good global demand.

Meal:  sales are low end but prices are competitive, and should see better demand moving forward.

Soyoil:  sales low end, and not competitive.

Beans:  sales were good with most going to China.  Sales should continue to improve moving forward.

Corn:  sales low end, continue to look for signs of China.

ANNOUNCEMENTS

Haiti saw its first outbreak of African Swine Fever in 37 years.  

China's Ag Ministry lowered its sow herd inventory target for the Five-Year - Plan, in an effort to ensure supply and stabilize prices.  In an interim plan for the hog breeding capacity, the Ministry of Ag and Rural Affairs said the target for the sow herd was now around 41 mln head for 2021-2025, and should be no lower than 37 mln head.  Prev. guidelines jointly issued set the target between 40 mln to 43 mln head.

CALLS

Calls are as follows:

beans:  3-5 higher 

meal:  90-1.00 lower

soyoil:  40-50 pts higher

corn:  1 lower

wheat:  3-5 higher

OUTSIDE MARKETS

Crude oil at $71.61/barrel, and the US dollar at 93.13.  Stocks are higher overnight despite comments from the Wed FOMC meeting suggesting QE tapering could begin as soon as November.  The Fed convened their two-day meeting and did not change the interest rate as expected.  The US dollar firmed to its highest level in more than a month.  

TECH TALK

• November bean prices continue to climb highs with a good bid under the market as pullbacks are now taken as an opportunity to price or cover a short.  We are back within the previous trading range from $12.70-$13.10.   The trend is weak with an ADX of 11, and the market will have to contend with stiff resistance at $12.95.  But would look likely to go there as the market has some buying interest.  Trade over $12.95 would be extremely friendly, opening the door to $13.10, top of the market.  
• December meal chart chops sideways and has been traveling from $335.00-$345.00 for several weeks.  Prices are walking back to test $340.00 once more, to see if it is a level of support in the market that can eventually trend higher.  
• December soyoil futures had a great performance, finding support from the break to 54c after the release of the news story to trade over 57c today.  That type of behavior is extremely friendly, as stronger markets only have the ability to bounce back from a sharp break.  Trade back over 57c will now invite new buyers to the table, and a pullback to 5550c is now a buying opportunity.   
• December corn is stuck in a sideways pattern but each time the market pulls back to $5.15 and holds, the promise to eventually move higher is noted.  While corn prices are not rallying, trendline support has been lightly reinforced at $5.15.  Target high is $5.45 on another rally.  
• December wheat prices held minor trendline support this week at $6.88 for a return trip over $7.00 and the 100-day moving average of $7.01.  The market at its high of $7.15 is right against major trendline resistance, so trade over this level would trigger more short-covering in the market, as well as possible new buying interest.  Would look initially for this market to have trouble heading above $7.15, and perhaps to back and fill towards $6.90 again.  

DECEMBER CORN

The market trading range is outlined in red at $4.97 1/2 bottom and $5.37 1/2 top.  The down-trend has disappeared leaving prices in a large sideways trade.  Market walked back to test $5.12-$5.15 again to see if it would define and reinforce this level as support.  The chart has a slightly more upbeat look to it, suggesting that a return to previous lows under $5.00 may be more difficult to get to.  

TAGS – Feed Grains, North America