World Perspectives
feed-grains

PM Post - Beans Beaten Worst

THE OPEN

Nov beans:  17 lower

Dec meal:  2.80 lower

Dec soyoil:  108 pts lower

Dec corn:  11 lower

Dec wheat:  10 lower

The markets opened into lower prices due to weight from outside markets, which included sharply lower stocks, weaker energies, and a firmer US dollar.  Traders will be monitoring Fed comments this week to get a handle around tapering.  

Corn prices remained steadier vs. soy, as 1.  there is more chatter about disappointing corn yields as we move further into harvest and 2. the bean markets affiliation with Chinese equities, which has in the past resulted in bean market weakness.  The possible failure of China's Evergrande Group, a property developer with over $300 bln in debt, which defaulted on a debt payment created fears of contagion in the broader property sector.  Chinese markets are closed for their autumn festival.  As a result of this, traders were fleeing to the US dollar as a safe haven. 

At 10:00 export inspections are as follows:

beans:  275,169 mt vs. 193,420 mt week ago

wheat:  563,390 mt vs.567,438 mt week ago

corn: 403,104 mt vs. 159,429 mt week ago

Inspections improved as Gulf operations slowly come back on line. 

SOY

  • The soy complex opened on a weak note, but prices turned technically lower breaking the 200-day moving average at $12.65 as buyers stepped away.  Sell-stops were triggered under the 200-day MA of $12.65, but once again there was little downside follow-through as most are careful in these trading ranges, and don't want to sell at the bottom.    
  • December soyoil prices traded under key support at 55c which sent values to new trading range lows as well.  Dec meal held in as traders bought meal/sold soyoil.  Dec. oilshare falls to 44.73% while crush trades to 88c/bu.  Bean spreads were wider with Nov/Jan trading out to 9 /2c, and out towards the prev. market low at 10c.  The Nov21/22 inverse also was lower trading down to 25 1/2c from 32 3/4c.   
  • The lack of sales announcements and cautious outside markets continues to weigh on prices into the midday hour.  Dec/March meal trades from $4.30 carry out to $4.70.  Prices for beans and soyoil show very little inclination for recovery trade, as buyers are not wanting to purchase on such a weak technical performance.  End-users are exercising patience.  Buy corn/sell bean trade continues into midday.

GRAINS

  • Corn prices were lower as exposure to outside weakness continued here.  Funds are the longest corn, and so the path of least resistance was lower.   Harvest was slowed a bit as weekend rains moved through many areas.  End-users continue to sit under the corn market, waiting for the brunt of harvest to take prices lower.  Some of the pressure today could result in margin calls, also adding weight to price action.  
  • Harvest should be advancing through Ohio and Indiana this week.  December corn trades down to key support and the floor of the market now which is $5.15 before finding short-covering and bargain hunting.  Spreads leaned weaker with Dec/March out to 8 1/2c carry from 7c, while Dec21/22 trades from 23 1/2c inverse down to 17 3/4c.  Lack of export flow from the Gulf and lack of business announcements keeps this market on a downward trajectory.    
  • December wheat succumbed to technical weakness elsewhere on the board, and likely stays in a large sideways chop from $6.80-$7.20.  Wheat tender business remains more active, as Russian wheat premiums continue to rise.  Support for wheat is that there is talk now that Australia's weather is turning drier. 

AT MIDDAY THE MARKETS ARE AS FOLLOWS:

                                                                    HI                            LO

Nov beans:  17 lower                            12.86                        12.62

Dec meal:  1.90 lower                           342.60                       338.60

Dec soyoil:  100 pts lower                   56.36                          54.86

Dec corn:   3 lower                               5.27                            5.15 1/4

Dec wheat: 7 lower                               7.10 3/4                      6.95 3/4

Nov canola:  6.00 lower                        874.00                        863.10

OUTSIDE MARKET

Stocks are 500 pts lower, but crude seemed to find some buying interest as prices traded just under $70/barrel.  

CLOSING COMMENTS

Historically, when stocks in Asia go south, beans have been punished the most in its correlation with China.  Today was no exception, as bean bears were rewarded on the back of weaker technical price action, and the story of China's economic problems.   There were no sales announcements this AM which added more to an already bearish sentiment.   

Weather is going to turn warmer and drier again over the next 10 days which will allow farmers to get back into the fields.  Advertised expectations for corn harvest are centering around 8% to 10% complete.

Low end target if we close on our lows:

Nov beans:  $12.40

Dec meal:  $330.00

Dec soyoil:  54c

Dec corn:  $5.05-$5.08

Have a good evening...........

 

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