Note: The Technical Perspectives launch period will be closing soon and your access to these reports will end on Tuesday, 17 September 2019. To continue accessing this information, please let us know by emailing Matt Herrington at mherrington@agrilink.com. 

 

THE OPEN

• Nov beans: 1 3/4 lower
• Dec meal: .70 lower
• Dec soyoil: 3 higher
• Dec corn: 1/2 lower
• Dec wheat: 2 1/2 lower

 

The markets opened as called but turned lower as China confirmed that soybeans would not be on the list of products for which tariffs were rolled back. Funds came out at the open selling back what they had purchased yesterday, but setbacks were supported at lower levels as further congestive price action takes place. Buy soyoil/sell meal and buy corn/sell wheat and bean spreads were main features. 

In other political news; the White House is meeting with biofuels companies today in search of an amicable trade off for the recent waiver concession granted to big oil. 

 

SOY

Beans and meal prices turned lower after the open even as soyoil prices turned higher with oilshare charging back again towards the 33% benchmark (midday value of 32.94% in Nov futures). Dec meal started the day at the top of the trading range and against chart resistance with a mid-range close, setting it up for a break. The catalyst for the price drop was also courtesy of South Korea purchasing 3 cargoes of meal out of South America instead of the US, along with the fact that China approved meal purchases from Argentina for the first time. Soyoil charts were pushing sideways/ higher, so a rally towards 29c was not very surprising to see. Nov crush was lower, trading down to 87c/bu from values that were 91/bu yesterday. Beans followed soyoil charts higher at first but could never gain upside traction following weaker meal prices. The Nov/Jan bean spread was still firmer trading into 13 1/2c from 13 3/4c, but not far away from recent lows of 14 1/4c. Dec/March meal carries widened out to $5.20 from $4.80. Price action for beans, meal, and soyoil remained that of congestive trading range activity. 

 

GRAINS

Grains worked lower from the outset with corn prices finding more support than wheat on technical pullbacks. Corn prices continue to struggle on rallies, as exports are expected to be lower in tomorrow's USDA report. To highlight, South Korea recently purchased South American corn instead of US. However, with yesterday's rally funds appeared ready to cover in more of their larger short position, and when the key level of support held in the Dec contract at $3.57 prices turned higher. EIA released its ethanol stats with production up 10,000 bpd to 1.02 mln bpd, and stocks down 1.3 mln bbls/day to 22.5 mln bbls, adding support to price action. The numbers implied that, at current rates, corn to ethanol would be 5.4 mln bu over the marketing year. Corn spreads were firmer with Dec/March trading into 12 1/4c from 13c. Dec 19/Dec 20 spread traded from 40 1/2c to 43 1/4c. Wheat prices setback technically as well, but like corn found support on market pullbacks. KC wheat prices rallied back over $4.00 attempting to put in congestive price action around that level. 

 

AT 12:00 THE MARKETS ARE AS FOLLOWS:

                                           HI       LO

Nov beans: 6 lower       8.73 1/2     8.64

Dec meal: 3.70 lower      298.80     293.80

Dec soyoil: 24 higher      2892      2844

Dec corn: 1 lower       3.63 1/2     3.56 3/4

Dec wheat: 5 lower       4.82 1/2     475

Nov canola: .80 lower     440.60     438.40

 

OUTSIDE MARKETS

The Dow opened 23 pts higher but traveled over 100 pts by midday, back over the 27,000 level. Crude oil traded lower back towards $55.63/barrel. The US dollar remains strong at 98.74, slightly negative for wheat trade.

 

CLOSING COMMENTS

Major trends are sideways/lower. Funds are net short. Corn ctr lows were just posted on Monday. While the markets have stabilized, they have not traveled too far from their lows. 

There are many uncertainties as to what the USDA will report on Thursday, and it may be up to the October report to get closer to the yield / production truth. By then, harvest will be farther along, and more should be known. Maybe it's even up to the Jan report to change our trend altogether. However, given we are sitting at monthly lows, would probably not be a bad idea if short to get something covered, as any friendly number will create a larger reaction. By the same token, the Sep report can sometimes create a “sell the report and buy the data” price action, with interim lows set. If the report is friendly prices will rally. If the report is neutral to bearish, funds still may cover in some of their position, hunting for a break. 

Could be a cautious bull down here but would rather wait for chart confirmation of a reversal which has not yet come. 

 

ON THE CALENDAR: 

September futures expire at noon CT Friday. WASDE report is tomorrow at 11:00 AM CT. 

 

FYI DEPARTMENT

From Reuters: Argentina's farmer sales of corn and beans fell for the week ending Sep 4 amid poor crush margins and weaker demand from exporters and domestic buyers, according to official gov. data. 

Weekly bean sales for the current crop totaled 696,800 tmt, down by 423,200 tmt week-on-week. Sales to domestic crush formed the majority of sales at 429,200 tmt, off by more than 170,0000 tmt over the week. Domestic crush margins were at an 8 month low of $3.25/mt on August 30 before rebounding to $6.25/mt on Sep 4. Sales to exporters totaled 267,600 tmt, nearly half the 518,700 tmt sold the prev. wk, and more than double the 132,900 tmt sold yr ago.

China's statistics bureau released its regular series of inflation data, including pork prices which have surged during August, now at a record high level. According to Financial Times, Chinese central party officials have called for the task of rebuilding the swine herd "in a military-style order", with major subsidies offering to construct new large scale hog facilities. 

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

 

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