THE OPEN

November beans:  5 lower

December meal:  3.80 lower

December soyoil:  90 higher

December corn:  1 1/4 lower

December wheat:  3 3/4 higher

The markets opened as expected with more profit-taking as funds remain long and the weaker technical picture, lower demand currently, and improved weather finds more bulls opting out, except for soyoil.  Spreads were mixed, while oilshare continued its bull market trend higher.  Aside from soyoil, the other markets broke lower into the last hour of trade.  

SOY

• The key feature for the soy complex was that of a weaker tone in meal as opening losses deepened on the back of buy soyoil/sell meal trade, pushing August oilshare to 47.68% and Sep. to 47.26%.  Meal prices trend lower as buyers remain patient given the spread trade and weaker technical picture.  
• December meal breaks light support at $360.00 which opens the door technically for a slide back to major support from $355.00 to $357.00, and end-users remain patient.  Meal prices dip on China's negative crush margins which implies they may not need to buy US beans so early this season.   
• December soyoil values appear ready to spend its day higher in recovery mode off the lows at 6058c this week, remaining well bid all day.   Canola prices are also supportive for soyoil trade, with November up 10c and trending back towards the $900.00 level on continuing hot and dry weather over canola acreage in Canada.  Palm oil's trade was also supportive for soyoil into new ctr highs.  
• Traders reading headlines are booking profits now on small bean rallies which sends prices back towards Thursday's lows.  At midday, Sep. beans take out $13.55, and November beans slide back under $13.50 triggering sell-stops.   Aug/Nov bean inverse continues to congest from 49c to 55c, while Sep/Nov bean inverse trades from 2 3/4c to 7c.  Would note that domestic bean basis bids are weakening as processors have been able to extend near term coverage, and the lack of export demand helps cushion supply.  

GRAINS 

• Grains were weaker as corn prices found new selling pressure in front of a weekend where the weather picture is constantly changing.  Funds remain longest this market, thus the profit-taking noted from the open as upside gaps remain open and chatter about record yields for the ECB continues.   
• December corn trades back below $5.50, while Sep. corn breaks $5.55 major support level which accelerates fund selling.  December wheat prices are trading both sides of even in Chicago, but the lack of fund positioning here does not provide much enthusiasm for trade either way.  
• Minneapolis wheat futures drag on KC and Chicago price action, with a few more possible showers crossing this weekend, and traders booking profits on the dynamic rally here.  Spread trade in corn remains in congestive mode, with Sep/Dec inverse trading down to 3 1/2c from 4 3/4c.  Dec/March corn trades from 7 1/4c to 7 3/4c.  

AT MIDDAY THE MARKETS ARE AS FOLLOWS:

                                                                     HI                                  LO

November beans: 13 lower                       13.68                             13.45 1/4

December meal:  9.00 lower                    368.00                            355.70

December soyoil:  98 higher                   63.24                               61.56

December corn:  18 lower                       5.65                                5.40 1/2

December wheat:  8 lower                       7.06 1/4                          6.91 3/4

November canola: 8.90 higher                896.90                             873.30

OUTSIDE MARKETS

The stock market opened 100 pts higher and is up 200 pts at midday.  Crude is on the defensive at $71.39/barrel, while the US dollar trades up to 93.02.  

CLOSING COMMENTS

Current technical price action remains defensive as the market attempts to dial in the "what-ifs" for August weather, while looking at good crop potential and lower demand from China.  Export sales were poor this week, and prices may need to adjust lower to find that spark of enthusiasm.  As noted before, China stepped in last to buy beans on the hard break below $13.00 to $12.50.   Brazil may soon be tapped out of beans, and their domestic corn supply has been dramatically reduced.  

The push and pulls of all these factors are now creating trading ranges as follows:

November beans:  $13.25 -$14.25, should find excellent support if prices go to $13.25, as it is the 100 MA and trendline

December meal:  $355.00 to $385.00, the inability of this market to sustain a rally suggests that prices can remain patient.  Given weaker fundamentals, they likely will.

December soyoil:  59c to 66c, would still look for places to own on breaks of size.  Chart price action does not turn trend until prices settle under 60c.  Look for the likelihood of a strong close towards the highs, as the market has given back very little during the session.

December corn:  $5.35 to $5.73, the market broke trendline support at $5.50 suggesting that the next target lower is doable at the 100-day MA of $5.35.  

December wheat:  $6.70 - $7.25, adjusted higher range.  But if the rest of the markets pull back, wheat will follow.  

ON THE CALENDAR

Cattle-on-feed and Quarterly Inventory data will be released after the close.  On a correction from this AM, August options expire on the close.

 

TAGS – Feed Grains, Soy & Oilseeds, Wheat, North America