THE OPEN
Nov beans: 2 higher
Dec meal: 1.10 lower
Dec soyoil: 40 higher
Dec corn: 2 lower
Dec wheat: 4 higher
The markets opened as called with prices continuing to wobble at first, only to find some tech strength on the back of strong wheat. A sale of corn was noted for the open but did not move the funds to buy the market at first.
The International Grains Council (IGC) raised its forecast for global 21/22 corn crop by 7 mmt to 1.209 bln tons. They also trimmed the forecast for global wheat production for 21/22 by one million to 781 million.
SOY
- The markets opened as expected with soyoil futures gaining on meal, and Dec. oilshare trading at 45.44%. Dec crush trades to 89.78c/bu. Soyoil futures manage to stay in the plus column for the morning on the back of higher palm and canola, though there are rumors that the EPA may release their biofuel blending targets tomorrow. Hard to stay long soyoil when the chance that a headline can derail a rally is out there.
- Export sales for beans were at the upper end with China purchases of 624 tmt. Bean sales now stand at 22.658 mmt vs. 31.996 mmt year ago. Of that total, China is on the books for 10,786 mmt. The lack of any morning sales stopped the market from having a better initial rally, but at least traders were not stepping in as sellers today given the recent better tech performance. Bean spreads were weaker with Nov/Jan carry trending out to 9 3/4c from 9 3/4c, while the Nov 21/22 inverse strengthened to 36 1/4c from 29 1/2c.
- December meal prices remain lower against soyoil into the midday hour, but the $338.00 level continues to offer technically sound support. December soyoil futures consolidated from 56c to 57c, but also funds buying interest on market pullbacks. At midday, a strong crude oil performance is helping the soyoil market to stay in the green. Oilshare is purchased, which could keep a bid under the bean market.
GRAINS
- Buy wheat/sell corn seemed to be the trade of the day. Corn opened on the defensive even as USDA reported a sale of 138,403 mt to Guatemala. The ho-hum reaction was noted as traders bought wheat/sold corn, following morning trends, with Dec wheat/corn at 1.81 1/2c to 1.91 1/4c. Dec/March corn spread narrowed into 7 1/4c from 7 3/4c carry, while the Dec 21/22 inverse traded from 24 1/2c down to 20 3/4c.
- Radars turn clearer today which will allow farmers to get back in the fields. Export sales for corn this AM were lighter than expected, going mostly to captive destinations, though there was a small portion to China at 4,200 mt. Outstanding new crop corn sales are now at 24.1 mmt vs. 20.6 mmt year ago. December wheat prices rallied following strong oats and higher global values, moving past key resistance at $7.15 which prompted more short-covering and fund buying. Technically the strong wheat performance finally pulls corn out of the red for the day into the plus column.
- Would note that there is also talk that Russia may start on Jan 1 to ration wheat exports, which kicked off the short-covering rally. Europe also has less milling wheat than normal, which may find buyers looking for this item. Wheat tenders globally remain active.
AT MIDDAY THE MARKETS ARE AS FOLLOWS:
HI LO
November beans: 1 higher 12.90 1/4 12.75 3/4
December meal: 1.20 lower 342.70 338.70
December soyoil: 35 higher 57.38 56.12
December corn: 3 higher 5.28 3/4 5.20 1/4
December wheat: 5 higher 7.19 1/2 7.04
November canola: 8.00 higher 877.90 867.30
OUTSIDE MARKETS
Stocks are surging again, up over 400 pts as the news about China's Evergrande now seems to fade in the rear-view mirror. Crude oil trades up to $73.25/barrel against a weaker US dollar at 92.98.
CLOSING COMMENTS
Harvest is progressing nicely as crops have matured quickly with the dry and warm weather before the current weekend rains. Results have been a mixed bag as the rumor mill goes in the market. One report is that some tar spotting has been noted for corn which can impact yields, with areas most impacted that of portions of eastern Iowa and the Great Lakes.
Technically the markets are in a slow-go mode, but the overall lows in beans, corn, soyoil, wheat, and even meal seem to be slowly getting reinforced. The ability of soyoil to firm from a hard break was indicative that 54c may be a temporary low, while prices are now trending up and away from $5.00 lows in Dec corn, $12.60 lows in November beans, $6.80 lows in December wheat. December meal prices are still skirting the lower end of recent ranges and looks the most prone to a further break should we have one.
If needing to price something, still feels like the markets are rangebound, but may want to move ideas up a bit. If wheat wants to make a run at day's end, it will likely take the rest of the crowd along for the ride. China needs to step up its buying for beans and corn, which is likely to happen as the Gulf improves.
For the day, these markets have a solid feel to them, so gains at midday could last into the end.
ON THE CALENDAR
Tomorrow we will get the Quarterly Hogs and Pigs report along with monthly Cattle-on-feed.
TAGS – Feed Grains, North America
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